Financial Crime World

Malta Tightens Financial Crime Laws in Response to Moneyval Report

Malta’s Financial Services Authority (MFSA) has implemented significant changes to its Anti-Money Laundering (AML) standards and procedures ahead of the publication of the Moneyval report on September 12, 2019.

Strengthening AML/CFT Supervision

In the past year, the MFSA has undertaken several initiatives to strengthen its AML/CFT supervision:

  • Setting up a Financial Crime Compliance function: The MFSA confirmed the strategic importance of AML/CFT supervision as an integral part of its prudential and conduct oversight.
  • Enhancing joint inspections with the Financial Intelligence Analysis Unit (FIAU): The Authority engaged 10 international experts to enhance the quality of joint inspections with the FIAU.
  • Strengthening collaboration with the FIAU: The MFSA strengthened its collaboration with the FIAU, resulting in a substantial increase in the number of inspections carried out and improving the quality and intensity of investigations.

Improving Authorization Procedures

The MFSA has also improved authorization procedures to ensure a more stringent AML process:

  • Focusing on shareholding structure, governance framework, internal controls, and business models presented: The Authority is now placing greater emphasis on these factors when authorizing financial institutions.
  • Introducing more rigorous due diligence procedures for licence applicants: The MFSA has introduced more stringent due diligence procedures, resulting in a notable increase in refused applications from 7% in 2017 to 25% in 2018.

Register of Beneficial Owners of Trusts

The Authority has also set up a Register of Beneficial Owners of Trusts and will extend this register to all trusts by January 1, 2020. This addresses recommendations made in the Moneyval report.

Looking Ahead

The MFSA is planning:

  • Stronger collaborations with internal institutional bodies and foreign regulators, as well as international organizations: The Authority aims to strengthen its relationships and cooperation with other regulatory bodies.
  • Increased investment in technology and human resources: The MFSA will invest in technology and human resources to better understand sophisticated money laundering methods.
  • Publication of standards for Company Service Providers (CSPs): The Authority plans to publish standards outlining due diligence processes that should be carried out by CSPs.
  • Formulation of a Risk Appetite Statement: The MFSA aims to define the amount of risk it is willing to accept and underpin its strategy with this statement.