The proposed regulatory framework introduces a notification-based regime for aircraft leasing companies incorporated in Malta designed to allow an exemption from traditional licensing requirements of the Financial Institutions Act, Chapter 376 of the Laws of Malta (the “FIA”). It is proposed that for a company to be exempt, it should satisfy three conditions:

1. it must be established and registered in Malta in accordance with applicable laws;
2. it must maintain total assets of at least EUR 100 million, which can be met through own funds or the ownership of assets, including aircraft and aircraft engines; and
3. its activities must be limited exclusively to the financial leasing of aircraft and/or aircraft engines, including ancillary activities.

Rather than undergoing the full licensing process as a financial institution under the FIA, eligible companies will be able to benefit from the exemption by submitting a notification to the MFSA and fulfilling other requirements, such as the appointment of a Money Laundering Reporting Officer. Upon receipt of a complete notification package and within a defined timeframe, the company would be admitted to a newly established ‘List of Aircraft Financial Leasing Companies’ (the “List”) maintained by the MFSA within the Financial Services Register. Companies included on the List would be classified as “Notified” persons, benefitting from a more streamlined and proportionate regulatory approach.

It is proposed that a lessor’s application for inclusion on the List must be submitted in writing and comply with all applicable rules. The MFSA would then be required to confirm the lessor’s admission within 20 working days.

Before a company can be admitted to the List, it is required to appoint a third-party Due Diligence Service Provider (the “DDSP”). The DDSP is primarily responsible for conducting a thorough due diligence process to ensure that the ultimate beneficial owners, board of directors, qualifying shareholders, Money Laundering Reporting Officer (the “MLRO”), and any other key service providers or functionaries meet the high standards of fitness and properness set by the MFSA. This assessment must be completed both at the time of admission and maintained on an ongoing basis.

Corporate Company Service Providers (“CSPs”) licensed under the Company Service Providers Act (excluding under-threshold CSPs) may act as DDSPs, subject to the MFSA’s satisfaction that they possess the necessary resources and expertise.

In addition, the company must appoint an MLRO in accordance with the Prevention of Money Laundering and Funding of Terrorism Regulations, S.L. 373.01 (the “PMLFTR”), ensuring robust anti-money laundering oversight from the outset.

Companies included in the List will be subject to limited ongoing requirements. Nonetheless, these requirements will include certain regulatory reporting obligations, such as providing information about the jurisdictions in which their lessee clients are incorporated, as well as details of any branches or business activities conducted abroad. All such obligations will be set out in a dedicated Rulebook to be issued by the MFSA.

Alongside the introduction of this new regulatory framework, the MFSA intends to maintain the existing exemption under Article 3A of the FIA, which applies to both aircraft and ship financial leasing. This exemption entails that companies owned or financed by eligible professional counterparties can conduct aircraft or ship financial leasing without needing a licence, provided they meet the specific ownership and funding criteria set out in Article 3A.

Companies that do not fall under the Article 3A exemption and fail to meet the conditions of the proposed framework will be required to obtain a licence under the FIA to conduct aircraft financial leasing activities.

The proposed Bill introduces an additional exemption for aircraft financial leasing, supplementing the existing Article 3A exemption. It also grants the Minister for Finance authority to issue regulations specific to this sector and empowers the MFSA to issue, amend or revoke rules for companies that have been admitted to the List.

Amendments to the Financial Institutions Act (Fees) Regulations (S.L. 376.03) will introduce a €7,500 notification fee for companies seeking admission to the List of Aircraft Financial Leasing Companies, as well as €25,000 annual renewal fee for continued inclusion.

A new set of regulations, titled the ‘Financial Institutions Act (List of Notified Aircraft Financial Leasing Companies) Regulations’, is proposed to be enacted. This subsidiary legislation will establish the notification regime and set out the main requirements and features for aircraft financial leasing companies operating under this framework.

To ensure compliance with international standards, the PMLFTR will be updated. The definition of “relevant financial business” will be broadened so that companies operating under the notification regime are subject to anti-money laundering and counter-financing of terrorism obligations, aligning with the FATF Recommendations and EU Directive 2015/849.