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Statement of Source of Wealth and Source of Funds

MFSA guidelines to the new submission form

13 September 2022

On 12 August 2022, the Malta Financial Services Authority (the ‘MFSA’ or the ‘Authority’) introduced a new standardised template, in the format of a self-declaration form, to be used by the relevant industry participants for the submission of a statement in regard to their source of wealth (‘SOW’) and source of funds (‘SOF’) (‘Annex AX26: Source of wealth and Source of funds self-declaration form’) (hereinafter collectively, the ‘Statement’). The submission of the Statement in the above-referred format has now become mandatory and comes as a replacement of the prior Statement of Wealth which was previously required to be audited.

Scope and application

In general, the appointment of individuals to roles or positions which may have an impact on the direction of an authorised person providing financial services (or an individual otherwise occupying certain positions of trust) is subject to prior regulatory approval. Such approval is conditional upon a due diligence assessment carried out by the Authority, the outcome of which aims to ensure that the Applicant1 meets the fitness and properness suitability criteria, amongst which the individuals’ integrity and solvency is a key criterion.

To that effect, qualifying persons holding significant or controlling interests in an authorised entity or who may be Politically Exposed Persons (‘PEPs’) are now required to submit the Statement as an attachment to the online personal questionnaire at application stage and the information therein should be updated periodically where new material developments arise.

In addition, the Authority reserves the right to also request the submission of such Statement by other individuals, who may not necessarily fall in any the aforementioned categories, on a risk-sensitive basis and as deemed appropriate.

Individuals submitting their Statement are required to provide accurate information and should refrain from providing general or vague descriptions of their SOW and SOF. Where necessary, the MFSA may require, on a case-by-case basis, documentary evidence verifying the information self-reported.

SOW

The SOW refers to the origin of an individual’s entire body of wealth, including, inter alia, an individual’s business or economic activity, employment, investments and/or inheritance. The information to be self-declared in the Statement should illustrate in a detailed manner:

i. the individual’s net worth; and
ii. the origination of such net worth and the means whereby such net worth was produced.

The onus is placed on the Applicant to ascertain that such proceeds emerged from legitimate business and commercial activities.

SOF

The SOF refers to the origin of the particular funds or assets which are the subject matter of the business relation or the transaction to take place, and, in general, it should be identified for every individual transaction as, for example, each time that funds are used to capitalise or otherwise finance an authorised entity.

The MFSA has advised that the mere provision of evidence of movements of funds through the banking system shall not be sufficient for this purpose. The information to be provided should be substantive, relevant and should demonstrate the origin of the funds and the methods/circumstances under which the funds were acquired.

Following the Authority’s Circular on the launch of the new template, the MFSA issued a Guidance Note to assist individuals who are required or requested to disclose their SOW and SOF, with the intention of laying down its expectations with respect to the details of such self-declarations, including documentary evidence.

 

Deloitte Malta will be closely monitoring developments in the furtherance and application of the new SOW and SOF submission form.

1. The term ‘Applicant’ refers to any person, including any entity corporate or unincorporated, applying for a license or other authorisation to be issued by the MFSA.

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