On the 24th of December 2024, the Malta Financial Services Authority (MFSA) implemented a significant revision to its fee structure for banks, financial institutions and insurance providers, increasing both authorisation and supervisory fees. These new fees shall have a considerable impact on financial services operators in Malta, particularly those engaged in Payment Services and Electronic Money Services, commencing from 1st January 2025.
Which Sectors are these fee revisions effecting?
These legal notices are intended to amend several legislation regulating different sectors, namely:
- Trusts
- Pension Funds
- Retirement Funds
- Banks
- Crypto Currencies
- Financial Institutions (FIs)
- Insurance Providers
Overview of the Revised Supervisory Fee Structure
The MFSA’s changes primarily affect the Annual Supervisory Fees & Application Fees for FIs.
These new fees are notably higher, with some categories seeing an increase of up to several thousand euros. The revised fee structure is dependent on the service being provided & under which category such service appertains in the First & Second Schedule of the Financial Institutions Act[1].
The revised fee structure is outlined below:
Supervisory Fee: AISP (Account Information Service Providers)
New Fee: EUR 5,000
Previous Fee: 0.02% of total assets (minimum EUR 2,500)
Supervisory Fee: Category 1 Activities (Lending, leasing, venture or risk capital, issuing and administering other means of payment, money broking, underwriting share issues and participation in such issues)
New Fee: Fixed EUR 15,000 + 0.02% of total assets (as reported in the FI Return)
Previous Fee: 0.02% of total assets (minimum EUR 2,500)
Supervisory Fee: Category 1 &/or One Category 2 Activities (Payment Services and Financial Institutions issuing Electronic Money excluding Account Information Services)
New Fee: Fixed EUR 25,000 + the higher of (i) 0.02% of total assets, (ii) 0.0003% of total monetary value of payment transactions, or (iii) 0.01% of the average daily outstanding electronic money
Previous Fee: 0.02% of total assets (minimum EUR 2,500)
Supervisory Fee: Category 1 &/or Both Category 2 Activities
New Fee: Fixed EUR 35,000 + the higher of (i) 0.02% of total assets, or (ii) the aggregate of 0.0003% of total monetary value of payment transactions and 0.01% of the average daily outstanding electronic money.
Previous Fee: 0.02% of total assets (minimum EUR 2,500)
[1] Financial Institutions Act, Chapter 376 of the Laws of Malta
Overview of the Revised Application Fee Structure
Additionally, there has also been an increase in the Application Fees that any company that intends to carry out, regularly or habitually, activities listed under the First and Second Schedule of the Act[2] in or from Malta (other than account information service). Whilst the previous application fee was set at EUR 3,500, the new established fees are outlined below:
Application Fee: One or more Category 1 activities and/or One Category 2 activities
New Fee: EUR 10,000
Application Fee: Both Category 2 Activities
New Fee: EUR 15,000
Application Fee: One or more Category 1 Activities & Both Category 2 Activities
New Fee: EUR 15,000
The above-mentioned fees shall be reduced by 25% in case of a modification in license that is, where a financial institution intends to carry out one (1) or more activities in addition to those which it is licensed to carry out. Additionally, should a financial institution cease from conducting one (1) or more, but not all, of the activities which it is licensed to carry out, it shall upon the submission of a request to the competent authority to modify its licence, accordingly, pay to the competent authority a modification fee of one thousand euro (€1,000).
[2] Financial Institutions Act, Chapter 376 of the Laws of Malta
How will this impact Payment Service Providers & Electronic Money Institutions?
The most significant change for most financial institutions, particularly those offering Payment Services and Electronic Money Services, is the increase in fees for payment services, such as, money remittance etc. and for financial institutions issuing Electronic Money, namely, the sectors falling under both Category 1 and Category 2 activities. These entities will now face an annual supervisory fee of EUR 35,000 or more, which is a substantial hike from the previous structure.
Additionally, these fees are no longer solely asset based. The newly implemented legal notices have introduced a combination of fixed fees and percentages based on the total monetary value of payment transactions, or the daily outstanding balance of electronic money which implies that that institutions with higher transaction volumes or outstanding balances will face even higher fees.
Concluding Remarks
In conclusion, the revised fee structure introduced by the MFSA, highlights a significant shift for payment service providers and electronic money institutions operating in Malta, particularly those offering Payment Services and Electronic Money Services. Such licensed entities would do well to be aware of such changes as the significant increase might have a financial impact on these entities, especially as the basis of these new fees lies in a combination of fixed fees and transaction-related metrics.
The regulator’s position on the matter is that as Malta continues to be a key player in the global financial services sector, such recently implemented legislative amendments intend to strengthen the regulatory environment whilst simultaneously maintaining Malta’s competitive edge with other jurisdictions.
In view of such changes, our Firm shall continue collecting its Clients’ feedback on such changes in order to be able to intermediate with the Authority in case such measures prove to be detrimental to the Clients’ interests.
