Financial Crime World

Malta Financial Services Authority’s Supervisory Interactions with Money Laundering Reporting Officers

In this article, we’ll discuss the key findings and observations made by the Malta Financial Services Authority (MFSA) during supervisory interactions with Money Laundering Reporting Officers (MLROs) in the financial services sector for the years 2021, 2022, and 2023.

New Issues Encountered in 2022

The MFSA observed several new issues during its interactions with MLROs in 2022. These included:

  • Conflict of Interest: Engaging in different roles that posed a conflict of interest due to personal, matrimonial, or business relationships with Ultimate Beneficial Owners (UBO)/Directors.
  • Lack of Knowledge on ML/FT-Related Matters: Insufficient knowledge and understanding of Money Laundering (ML) and Financial Terrorism (FT)-related matters among MLROs.
  • Disinterest in Providing Training to Staff: A lack of interest in providing training to staff members on ML/FT-related matters.

Findings During Proposed MLRO Interviews in 2023

In 2023, the MFSA conducted proposed MLRO interviews and observed several issues, including:

  • Poor Legislative Proficiency: Insufficient knowledge of ML/FT legislation (8 instances).
  • Lack of Basic ML/FT-Related Knowledge: Inadequate understanding of basic ML/FT concepts (7 instances).
  • Insufficient Training and Academic Background: Lack of relevant training and academic background for the role of an MLRO (6 instances).
  • Lack of Knowledge on Ancillary Financial Crime-Related Matters: Limited knowledge on ancillary financial crime-related matters, such as anti-money laundering regulations and sanctions (5 instances).

The MFSA observed several trends and improvements among incumbent MLROs. These included:

  • Reporting to the Board and Senior Management: Insufficient autonomy was observed in 2 instances in 2023, indicating a need for improvement.
  • Conflict of Interest: A reduction in conflicting roles was observed, with only 1 instance in 2023.
  • Knowledge and Expertise: The number of instances where MLROs had insufficient knowledge or awareness decreased from 34 (2021) to 4 (2023), indicating a positive trend.