Financial Crime World

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How to Prevent Financial Crimes with Internal Controls in Malta

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International sanctions have become a crucial tool for governments worldwide to address various threats and promote global peace and security. However, these measures also pose significant risks for financial institutions and individuals operating in Malta.

International Sanctions: A Global Phenomenon

International sanctions are primarily issued by the United Nations (UN) and the European Union (EU), targeting individuals, entities, or countries deemed to be a threat to global security. These measures typically involve freezing assets, imposing travel bans, and restricting trade and economic activities.

Malta, as an EU member state, is obligated to implement these sanctions within its territory. The country’s financial regulatory authority, the Malta Financial Services Authority (MFSA), plays a key role in ensuring that financial institutions comply with international sanctions.

Obligations of MFSA Licence Holders

Financial services providers operating in Malta, including banks, insurance companies, and investment firms, are required to take note of all international sanctions and exercise caution when conducting business activities. They must:

  • Verify their records on an ongoing basis for any information or transactions connected to designated individuals or entities
  • Report the findings of their verifications to the Sanctions Monitoring Board and the MFSA
  • Inform the MFSA of any action taken, including reporting funds, financial assets, and economic resources identified as belonging to designated individuals or entities

Reporting Requirements

MFSA Licence Holders are mandated to report the following:

  • Funds, financial assets, and economic resources identified as belonging to designated individuals or entities
  • Any information or transactions connected to designated individuals or entities

US Sanctions: A Separate Entity

In addition to UN and EU sanctions, the United States has also imposed its own set of sanctions on various countries, individuals, and entities. These measures are enforced by the US Treasury Department’s Office of Foreign Assets Control (OFAC) and can have significant implications for financial institutions operating in Malta.

Conclusion

International sanctions pose a significant risk to financial crimes prevention in Malta. Financial services providers must be vigilant and comply with reporting requirements to prevent unwittingly supporting activities, individuals, or entities subject to sanctions. By understanding the obligations of MFSA Licence Holders and staying informed about international sanctions, financial institutions can effectively mitigate their exposure to financial crimes and maintain a safe and secure business environment.