In recent decades, financial crime has become common vernacular, filling column inches with stories on fraud, terrorist financing, and corruption.
With the advancement of technology, financial crime in all of its manifestations – from electronic corruption and money laundering to sanction evasion, insider selling, and market abuse – is getting increasingly sophisticated. This increase – and complexity – has been a source of concern for governments all around the world.
What is the MFSA?
The MFSA will monitor the priorities established and respond to unanticipated extraneous occurrences. The Malta Financial Services Authority (MFSA) is Malta's only banking and finance supervisor. It also serves as the Resolution Authority. The Malta Financial Services Authority (MFSA) was founded in 2002 when it took over the functions of the Central Bank of Malta, the Malta Stock Exchange, and the Malta Financial Services Centre.
Whom the MFSA Regulates in Malta?
It oversees Malta's banking, financial, reinsurance, commercial, social, and securities markets. Banking, financial companies, payment organizations, insurance firms and insurance intermediaries, financial services companies and mutual funds, securities markets, recognized investment transactions, confidence management companies, company network operators, and pension schemes are all regulated by the MFSA. It has also been in charge of regulating Virtual Financial Assets since 2018.
An Act of Parliament established the MFSA, and its primary tasks include protection for consumers, global financial coherence, economic stability, and oversight of all financial services operations. The MFSA also serves as a policy advisor to the government on the financial services industry subjects. The MFSA works closely with local and global entities to perform its tasks.
The Function of MFSA
The MFSA manages and controls the financial services enterprise in Malta intending to accomplish the high-level financial regulatory objectives, which are:
The MFSA's function, according to the MFSA Act, is:
- to control, supervise, and oversee Malta's financial services;
- to promote the political preferences and legitimate interests of economic service customers, as well as competitive balance and price transparency in financial services;
- to monitor and assess investment and commerce practices related to the provision of financial services to private and other individuals, as well as to give necessary information and recommendations to the public;
- to monitor the operation and enforcement of laws that directly or indirectly impact consumers of financial institutions in Malta and conduct or contract any study, research, or inquiry deemed essential in this respect.
- Maintaining high standards of behavior and administration across the financial sector;
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to carry out any other tasks or obligations allocated to it by this Act or any other legislation.
Mission and Vision of MFSA
The ultimate mission of MFSA is to be an autonomous, active and trusted oversight body whose mission is to defend market integrity and maintain finance industry integrity for the advantage and consumer protection law. In addition to that, MFSA aims to be a pioneering forward-thinking financial services supervisor with the industry's and the wider public's trust and dignity, leading to a robust and dynamic financial sector.
MFSA’s Supervisory Priorities of 2021
The Malta Financial Services Authority (MFSA) has issued its Supervisory Priorities for 2021, which were determined after taking into account the market situation, legislative changes, the Union Strategic Supervisory Priorities, and previous supervisory experience. Governance and ethics are among them: financial crime compliance, retail investor protection, cross-border activities, security, and financial stability. The priorities indicate the subjects on which the MFSA expects to spend its supervisory attention during the year.
The Financial Crime Compliance function serves two important functions. As an operator of the Financial Intelligence Analysis Unit (FIAU), the MFSA conducts AML/CFT supervision of MFSA-authorized firms on its behalf and in collaboration with the FIAU. This concept is repeated by the Sanctions Monitoring Board, with whom the MFSA works to verify that license holders follow applicable worldwide sanctions legislation and regulation.
Increased efficiency and effectiveness in identifying, reporting, and eventually combating financial crime had previously been identified as a 2020 MFSA objective. With the establishment of a dedicated FCC function in 2019, the MFSA now has a centralized source of AML/CFT knowledge, as well as an FIAU contact point with whom prudence and conduct inspectors may communicate. Given that combating financial crime is critical to preserving the Maltese financial services industry's integrity, profitability, innovation, and confidence, financial crime compliance has been preserved as a cross-sectoral priority for 2021.
Following the MFSA AML and CFT Strategy, the Authority has incorporated AML and CFT into its whole supervisory operation. The Supervisory Directorate has implemented processes via which the FCC function provides AML/CFT input to the different sectoral functions. This includes authorization applications, the addition of an AML/CFT component to all supervisory contacts, updated risk assessment systems with AML/CFT metrics, and increased anti-financial crime training.
Apart from continuing its excellent engagement with the FIAU, the Authority will continue to expand on the work done in 2020 in monitoring regulated individuals' compliance with AML/CFT duties. Furthermore, the FCC function will release frequent publications to keep the sector up to speed on AML/CFT developments and the present state of the AML regime within the industry.
