Financial Crime World

Risk Assessment Frameworks Crucial for Financial Institutions in Malta Amid Evolving Threat Landscape

Malta’s financial sector has been identified as a key area of concern in terms of money laundering and terrorist financing (ML/TF) risk, according to recent findings from a comprehensive risk assessment. The report highlights the need for financial institutions in Malta to adopt robust risk assessment frameworks to mitigate these risks.

A Medium-High Risk Sector

The assessment found that while many sectors have seen a reduction in residual risk over the past five years, the financial institution sector remains at medium-high risk due to inadequate implementation of anti-money laundering and combating the financing of terrorism (AML/CFT) frameworks by licensees. The sector’s size and exposure to various risks, including:

  • Terrorist financing
  • Proliferation financing
  • Targeted financial sanctions

make it particularly vulnerable.

Implementing Effective Risk Assessment Frameworks

The report emphasizes that subject persons must take into account the findings of risk assessments issued by regulatory bodies and authorities when evaluating their organization’s inherent risk and ML/TF risk management framework. This includes considering the impact of risk assessments on business areas such as:

  • Bribery
  • Corruption
  • Transaction monitoring rules

Expert Assistance from Deloitte

Deloitte’s financial crime team can assist financial institutions in Malta in assessing the impact of the latest risk assessment findings on their risk components and developing effective ML/TF risk management frameworks. The firm offers tailored solutions to help organizations stay ahead of evolving risks and maintain compliance with regulatory requirements.

Prioritizing Risk Assessment Frameworks

In light of these findings, it is essential for financial institutions in Malta to prioritize implementing robust risk assessment frameworks and ensuring that their AML/CFT measures are effective in mitigating ML/TF risks. Failing to do so may have serious consequences, including:

  • Reputational damage
  • Financial penalties
  • Legal action

By working with Deloitte’s experts, financial institutions can ensure they are well-equipped to manage the evolving risk landscape and maintain a strong reputation in the market.

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