MALTA Law and Practice Contributed by: Ian Gauci and Cherise Abela Grech, GTG Legal
11. Open Banking 11.1 Regulation of Open Banking
12. Fraud 12.1 Elements of Fraud
As an EU member state, Malta fully transposed the Payment Services Directive (EU) 2015/2366 (PSD2) into its legislation in August 2019. Said implementation did not trigger any obligation for a bank or financial institution already licensed by the MFSA as a home state regulator to provide payment services to seek any re-authorisation of these activities in terms of the passporting rights exercised by the operator prior to the imple - mentation of these amendments. Nevertheless, despite banks taking the necessary steps to permit open banking by making their applica - tion programming interface (API) technologies available, the practical use of open banking in Malta remains limited. The proposed PSD3 and Payment Services Reg - ulation are expected to improve the functioning of open banking by removing the remaining obstacles to providing open banking services and improving customers’ control over their pay - ment data, enabling new innovative services to enter the market. 11.2 Concerns Raised by Open Banking The number of live and operative account infor - mation service providers (AISPs) or payment ini - tiation service providers (PISPs) operating within Malta is small. Therefore, the effects of PSD2 are yet to be felt in Malta, from the perspective of banks coping with data privacy or data security concerns, or with practical concerns on a more generic basis.
While the MFSA’s role is to educate consumers about scams involving financial products and services, it is unable to investigate perpetrators as this function lies with the police. Neverthe - less, the MFSA plays a substantial role in pre - venting harm to consumers from unauthorised activities. Indeed, as soon as the MFSA is aware of an unlicensed entity, it warns the general pub - lic to make sure they refrain from entering into any transactions or dealings with such entity. 12.2 Areas of Regulatory Focus In all instances, Maltese regulators are primarily concerned with consumer protection, with most policies and initiatives being imposed with this overarching principle in mind. One of the primary types of fraud on which regu - lators focus is cybersecurity and data breach - es. This includes protecting customer data and ensuring secure transactions. Other main caus - es for concern include payment fraud, identity theft, phishing attacks and investment scams. 12.3 Responsibility for Losses In Malta, a fintech service provider may be held responsible for customer losses under certain conditions, depending on the nature of the ser - vice, the terms of the agreement and the appli - cable regulations. Key situations where a pro - vider might be liable include: • breach of contract or terms of service; • negligence; and • failure to comply with regulatory require - ments.
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