Financial Crime World

Malta Takes a Leap Forward in Preventing Financial Crimes with Technology

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As Malta prepares to publish the Moneyval report on September 12, 2019, the country’s financial regulator, the Malta Financial Services Authority (MFSA), has been working tirelessly to strengthen its anti-money laundering (AML) and combating the financing of terrorism (CFT) standards and procedures.

Strengthening AML/CFT Supervision

Over the past 12 months, the MFSA has undertaken several initiatives to enhance its AML/CFT supervision. These include:

  • Setup of Financial Crime Compliance Function: The FCC function confirmed the strategic importance of AML/CFT supervision as an intrinsic part of the MFSA’s prudential and conduct oversight.
  • Closer Collaboration with FIAU: The MFSA has worked closely with the Financial Intelligence Analysis Unit (FIAU), resulting in a substantial increase in the number of inspections carried out.
  • Improved Authorisation Procedures: The MFSA has improved its authorisation procedures to ensure the AML process is more stringent, focusing on shareholding structure, governance framework, internal controls, and business models presented.
  • Rigorous Due Diligence Procedures: The MFSA has introduced more rigorous due diligence procedures, including reviewing definitions of “fit and proper” procedures to be applied at all stages of onboarding processes. In 2018, the MFSA refused 25% of applications, a notable increase from the 7% in 2017.
  • Register of Beneficial Owners of Trusts: The MFSA has introduced a Register of Beneficial Owners of Trusts, addressing recommendations in the Moneyval report and fully implementing National Strategic Action Plan requirements on beneficial ownership information on trusts.

Looking Ahead

The MFSA is planning to:

  • Strengthen Collaborations: Strengthen collaborations with internal institutional bodies, including foreign regulators and international bodies. A series of training sessions and workshops have been organized throughout September 2019 together with the US Embassy.
  • Invest in Technical Capacity: Invest in more technical capacity and supervisory instruments, as well as additional resources, to better understand increasingly sophisticated ways in which corporate structures are being exploited for money laundering purposes.
  • Publish Consultation Document: Publish a consultation document outlining proposed standards for due diligence processes to be carried out by company service providers (CSPs).
  • Formulate Risk Appetite Statement: Formulate a Risk Appetite Statement, defining the amount of risk the Authority is willing to accept in pursuit of its mission and strategic plan. This statement will underpin the MFSA’s strategy, explaining the “why” behind the Authority’s actions.

These initiatives demonstrate Malta’s commitment to preventing financial crimes with technology and ensuring a robust regulatory framework for its financial sector.