Financial Crime World

Financial Crime Definition in Malta: A Guide to Compliance

As financial crime continues to evolve and become increasingly sophisticated, it is essential for organizations in Malta to stay ahead of the curve and implement robust compliance measures.

What is Financial Crime?

Financial crime encompasses a range of criminal practices, including:

  • Money laundering
  • Tax evasion
  • Bribery and corruption
  • Financial market abuse

To effectively manage these risks, organizations must instill a culture of compliance that permeates every level of the business. This begins with embedding a compliance culture within the organization, where board members and senior management set the tone from the top and demonstrate their commitment to compliance through actions and communication.

Enterprise Risk Assessments

Enterprise risk assessments are crucial in identifying, measuring, and monitoring risks associated with financial crime. These assessments should be holistic, taking into account:

  • An organization’s business model
  • Products and services
  • Customers and suppliers
  • Geographical exposures

Internal Policies and Procedures

Internal policies, procedures, systems, and controls are the backbone of a comprehensive financial crime compliance program.

  • Policies should establish parameters for managing financial crime risks
  • Procedures translate these policies into workable practices that are updated regularly
  • Internal systems and controls, including technological tools, ensure that the organization’s FCC program operates as intended

Risk-Based Due Diligence

Risk-based due diligence is essential in assessing customer, counterparty, and asset risks, particularly in the context of sanctions. Organizations must establish risk-based procedures to manage these risks and apply measures to mitigate them.

Employee Training and Awareness

Employee training and awareness programs are critical in ensuring that employees have the knowledge and skills necessary to identify and manage financial crime risks.

  • Training should be continuous and address emerging trends and regulatory changes
  • Employees should be aware of their role in preventing financial crime and understand how to report suspicious activities

Designated Compliance Function

A designated compliance function is also vital, as it ensures that an organization operates in line with applicable laws and regulations. Compliance officers play a key role in advising the business on innovative practices that can be compliant with relevant legislation.

Independent Testing and Reporting

Independent testing of the FCC program by internal auditors or external parties is essential to ensure that the program operates effectively and in line with policies and regulatory requirements. Regular reporting to the board of directors and follow-up on recommendations are also crucial in maintaining a robust compliance program.

Conclusion

Financial crime compliance is not limited to regulated entities but applies to all organizations operating in Malta. With the ever-evolving technological landscape and innovative business models, managing financial crime has become a critical challenge that requires:

  • A dedicated management team
  • Robust internal risk assessments, systems, policies, and procedures
  • Knowledgeable employees
  • Continuous employee training and awareness programs
  • Independent testing and reporting

By following these guidelines, organizations in Malta can ensure they are adequately prepared to manage financial crime risks and maintain a robust compliance program.