Risk Assessment Frameworks for Financial Institutions in Malta: Insights from the 2023 National Risk Assessment Report
The Maltese government has recently published its 2023 National Risk Assessment (NRA) report, providing a comprehensive overview of the country’s vulnerability to money laundering, terrorist financing, proliferation financing, and targeted financial sanctions. This article summarizes the key findings and implications for financial institutions in Malta.
Overview of the Report
The NRA was developed through a collaborative effort between government authorities, representative bodies from the private sector, and the National Coordinating Committee on Combating Money Laundering and Funding of Terrorism (NCC). The report provides valuable insights into existing risks, enabling subject persons to adjust their compliance approach and risk mitigation strategies accordingly.
Key Findings
- A decrease in Malta’s overall money laundering residual risk since the 2018 NRA, reflecting the effectiveness of mitigating measures implemented by authorities and the private sector.
- Notable improvements across various sectors, including:
- Legal persons
- Trust and company service providers
- Banking
- Investment services
- Accountants and auditors
- Gaming
- Virtual financial assets service providers
- However, other sectors such as:
- Financial institutions
- Real estate agents
- Dealers in high-value goods were found to be more susceptible to money laundering risks.
Areas of Concern
The NRA identifies key areas of concern, including:
- Abuse of cash and cash-based businesses
- Use of Maltese registered companies lacking sufficient links to Malta
- Complex corporate structures
- Acquisition of high-value movable and immovable property
- Residual risks associated with:
- Terrorism financing
- Proliferation financing
- Targeted financial sanctions
What Does this Mean for Financial Institutions in Malta?
The report is now available for download at https://www.ncc.gov.mt/wp-content/uploads/2024/01/PublicNRA_Dec2023.pdf. All subject persons are required to consider the identified risks as part of their risk assessment process, reviewing and updating their controls, policies, and procedures as necessary to reflect and mitigate these risks.
Conclusion
The 2023 National Risk Assessment report provides valuable insights into Malta’s exposure to money laundering and other threats. Financial institutions in Malta must take note of the key findings and areas of concern, adjusting their compliance approach and risk mitigation strategies accordingly to ensure they are meeting their regulatory obligations.