Financial Services Authority Cracks Down on Compliance Breaches
The Malta Financial Services Authority (MFSA) has been intensifying its enforcement efforts to maintain market stability and ensure compliance with regulatory requirements. As outlined in Chapter 110 of the Laws of Malta, the authority is empowered to investigate potential breaches of financial services laws and regulations related to entities under its supervision.
Enforcement Function
The MFSA’s enforcement function is responsible for:
- Reviewing and investigating compliance failures
- Investigating misconduct and market abuse
- Determining any violations of laws administered by the authority
Upon completing investigations, the enforcement function communicates its findings to the decision-making body within the MFSA, providing recommendations for remedial action or enforcement measures.
Disciplinary Powers
In addition to administrative penalties, the MFSA has been exercising disciplinary powers to punish infractions. The authority is authorized to impose sanctions following investigations, which may include:
- Reprimands
- Warnings
- Other similar disciplinary actions
Financial Services Tribunal
The Financial Services Tribunal, established by Article 25 of the Malta Financial Services Authority Act, adjudicates financial services criminal and civil matters. The tribunal has jurisdiction to determine whether a competent authority’s decision was:
- Wrongly applied
- An abuse of discretion
- Manifestly unfair
Sanctions
Typically, sanctions imposed on firms and individuals for violations include:
- Administrative penalties
- Public reprimands
- Directives
- Suspensions
- Removals or restrictions of authorized individuals
The MFSA has established a methodology for setting administrative penalties, which ensures that they are proportionate and serve as effective deterrents.
Settlement Discussions
The authority has also been engaging in settlement discussions with firms and individuals to resolve compliance breaches without the need for formal enforcement action. These settlements aim to prevent disproportionate financial distress to licence holders while still holding them accountable for their actions.
Conclusion
In conclusion, the MFSA’s efforts to ensure compliance with regulatory requirements are aimed at maintaining market stability and protecting investors. The authority’s ability to impose penalties and disciplinary sanctions serves as a deterrent against future non-compliance, ensuring that financial services providers operate in a fair and transparent manner.