A Malta VFA Agent (or Agent) is an entity or individual which possess certain skills or competencies. A Malta VFA Agent would typically be an accountant, auditor or lawyer either in their own personal capacity or those employed within a firm as well as entities registered as corporate service providers. An organisation which is wholly owned and controlled by the aforementioned may also act as a Malta VFA Agent. The law also allows some discretion which may be applied by the Malta Financial Services Authority (MFSA) to approve persons as Malta VFA Agents who possess the necessary skills, competence and experience and qualifications.
What the law says
The Virtual Financial Assets Act (VFAA or Act) even when it was just a Bill identified the need to have an intermediary between the prospective clients and the competent authority (being the MFSA).
The law outlines the fact that a VFA Agent must be a “fit and proper person” and be resident in Malta. If the VFA Agent is a legal entity it may be both Maltese or foreign, but if foreign then the VFA Agent must operate in Malta through a branch. The VFA Agent as outlined in Articles 7(1)(d) – (f) to the Act shall be responsible for the submission of all legal documentation to the MFSA, must be independent from the issuer and disclose all relevant information to the MFSA.
Role of the agent
A Malta VFA Agent shall upon commencing discussions with clients on the purpose of their Initial Coin Offerings, need to perform a Financial Instruments Test (this will be explained in my next article). The purpose of this test is to ascertain whether the underlying nature of the coin or token to be issued is a virtual financial asset, a virtual token, electronic money or financial instrument. Such a test will be important to determine which laws, rules and regulations will apply for the issue and the classification of such assets.
A Malta VFA Agent shall ensure that the client has a robust and significant business plan and shall also guide the client on the requirements, information and disclosures which are required to be included in the White Paper before such are submitted to the MFSA for approval. Thus a Malta VFA Agent shall be acting as a gatekeeper responsible for the protection of the public interest by ensuring that it is content with the client, his background, operational setup and ability to deliver the proposed business plan as tabled within the application documentation to the MFSA.
A Malta VFA Agent shall be acting as a gatekeeper responsible for the protection of the public interest
The Malta VFA Agent shall be the MFSA’s main point of liaison and contact, and such Agent shall be required to keep all necessary documentation as well as other information on the issue/s made. It would need to furnish such to the MFSA or other relevant competent regulatory organisations during onsite and offsite compliance monitoring. This puts an emphasis on the Agent to ensure that all necessary due diligence documentation is in place and kept up to date in accordance with relevant anti-money laundering law and regulations. The Agent itself shall be subject to Chapter 373 to the Laws of Malta and the relevant subsidiary legislation.
Nevertheless, the role of the Malta VFA Agent does not stop here. The Agent shall on a yearly basis ensure that an annual compliance report is submitted to the MFSA.
Currently the law permits individuals or entities to act without a licence, however this will be a short-lived matter. Article 62 to the Act includes transitionary provisions which shall require all those acting as Agents to apply for a licence within one month. It is expected that applications to become Malta VFA Agents shall be permitted by the MFSA in or around October of this year.
If an individual or entity shall no longer intend to act as a VFA Agent for one or more clients or intends to surrender its registration it would (similarly to other licence holders) need to advise the MFSA its intention of resignation or surrender of licence. The Agent would need to do so in writing without and undue delay, outlining the relevant details for its resignation or circumstances for such surrender of licence. In the event of its intention to resign from its position as Agent, the Agent should also notify its clients in accordance with the terms and conditions outlined in the agreement entered between the two parties.
In conclusion, the role of the VFA Agent is to act as a filter for the MFSA, reducing the number of unwarranted applications which do not meet the necessary criteria for the attainment of a licence. It shall also be assisting the MFSA by ensuring that complete and accurate information is provided to the competent authorities and through its independence be in a position to ensure that issuers shall act and abide by the conditions of the laws, rules and regulations which may be issued from time to time.
Nicholas Warren is a senior manager, Blockchain & Fintech.
This article does not purport to give legal, financial or tax advice. Should you require further information, please do not hesitate to contact me on NWQuestions@gmail.com.