Financial Crime World

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Compliance Risks in Banking Sector in Malta on the Rise, Says Deloitte Report

A recent report by global consulting firm Deloitte has highlighted concerns over compliance risks in the banking sector in Malta, which have failed to keep pace with the growth of the industry. The report notes that while most sectors have seen a reduction in residual risk over the past five years, the financial institution sector remains a major concern.

Concerns Over Anti-Money Laundering and Combating Terrorism Financing

According to the report, the financial institution sector in Malta still poses a Medium-High risk to anti-money laundering (AML) and combating the financing of terrorism (CFT), with many licensees failing to demonstrate effective AML/CFT frameworks. The sector’s size and exposure to various risks, including terrorist financing, proliferation financing, and targeted financial sanctions, further exacerbate the problem.

Other Sectors’ Performance

The report also notes that only one sub-sector, land-affected gaming, has seen an increase in residual risk over the past year, driven by a recalibration of inherent risk.

Recommendations for Subject Persons

Subject persons are urged to take into account the findings of recent risk assessments issued by regulatory bodies and authorities, including the National Risk Assessment (NRA), when evaluating their own ML/TF risks. The report highlights the importance of understanding the impact of these findings on an organization’s inherent risk, particularly in relation to sector, jurisdiction, and products/services.

Deloitte experts recommend that subject persons consider the recommendations provided within the NRA and assess the implications for their business risk assessment, including areas such as bribery and corruption, fraud, and transaction monitoring rules. The firm also offers solutions to help organizations evaluate the impact of evolving risks associated with financial crime on their ML/TF risk management framework.

Call to Action

In light of these findings, Deloitte is urging subject persons to take immediate action to strengthen their AML/CFT frameworks and ensure that they are fully compliant with regulatory requirements. By doing so, they can reduce their exposure to compliance risks and protect themselves against potential reputational damage and financial penalties.

Key Takeaways

  • The banking sector in Malta poses a Medium-High risk to anti-money laundering and combating the financing of terrorism.
  • Many licensees have failed to demonstrate effective AML/CFT frameworks.
  • Subject persons should take into account recent risk assessments and assess their own ML/TF risks.
  • Deloitte offers solutions to help organizations evaluate the impact of evolving risks associated with financial crime on their ML/TF risk management framework.