MFSA Guidance Note on the submission of the Source of Wealth and Source of Funds

The Malta Financial Services Authority (MFSA) has issued a Guidance Note on the submissions of the source of wealth (SOW) and source of funds (SOF).

Currently, certain positions within authorised entities providing financial services are subject to prior regulatory approval and to a due diligence assessment carried out by the MFSA. The abovementioned Authority assesses the individual reputation and, on his integrity, and solvency. In this sense the anti-money laundering as well as combating the financing of terrorism form a significant part of the MFSA valuation, especially to those considered to be politically exposes persons and persons (PEPs) holding significant or controlling interests with authorised entities.

Going forward, the overall aim of the Guidance Note is to guide and support individuals when submitting their declarations of source of wealth and source of funds when requested by the Authority.

Source of Wealth (SOW)

The source of wealth declaration submitted should provide a detailed overview that includes all sources of an individual net worth, together with any of their assets & liabilities. It is important to note that all information provided should also detail how the wealth was acquired, along with supporting evidence. Individuals should keep in mind that any declarations submitted with general or vague descriptions will not be accepted and will delay the application processing. Further to the above all source of wealth declarations needs to be verified by a qualified accountant or auditor in his professional capacity.

Source of Funds (SOF)

The source of funds declaration should classify the origin of the particular funds or assets which are the subject of the business relationship or transaction which is to take place. In practice, it is the activity, event, transaction, contract, business, occupation or employment from which the funds used are generated or derived. The information on the source of funds will be required both at the application stage in respect of the initial capital and on an ongoing basis thereafter, where necessary.

When submitting the source of funds declaration, individuals should be aware that declarations submitted with general or vague descriptions derived from the business activity of the individual will not be accepted and will delay the application.

It is important to note that funds should preferably be remitted from a regulated credit or financial institutions within the European Union or within any jurisdiction with a high standard of AML/CFT. Furthermore, funds should be remitted from the account held in the name of the associated individual.

Having said this, if the funds are provided by or through a third party, a clear and detailed explanation informing the Authority on the relationship between the said individual and the abovementioned third party must be included.

Any individuals who do not comply with the MFSA requirements or whom provide incorrect and misleading information could potentially lead to a refusal of an application.

To read the full MFSA Guidance Note Click Here.

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