Financial crime compliance: a supervisory priority for the MFSA

Financial crime compliance: a supervisory priority for the MFSA

In recent decades, financial crime has entered common parlance – and fills column inches with reporting on fraud, terrorist financing, and corruption.


With the rise of technology, financial crime is becoming increasingly complex in all its forms – from electronic crime and money laundering to evasion of sanctions, insider dealing and market abuse. This rise – and complexity – has become of concern to governments worldwide.


Financial crime can be divided into two types. The first is where activities generate wealth (otherwise known as the proceeds of crime) in a dishonest manner – for example, acquiring someone else’s property through deceit. The second is where a benefit that has already been obtained dishonestly is protected, such as the case of money laundering. With terrorist financing, money or other property may have been obtained by honest means but is used to fund terrorism, for example sending money overseas to fund terrorist groups. 


In both types – and in all forms – financial crime posits a threat to the development and stability of an economy.


Recently the Malta Financial Services Authority (MFSA) issued its Supervisory Priorities for 2021, identified following consideration of the market environment, regulatory developments, the Union Strategic Supervisory Priorities and past supervisory experience. These are governance and culture; financial crime compliance; retail investor protection; cross-border operations; cybersecurity; and financial soundness. The priorities outline the themes on which the MFSA’s supervisory focus is to be expected throughout the year. 


The Financial Crime Compliance function performs two key roles. As an agent of the Financial Intelligence Analysis Unit (FIAU), the MFSA acts on behalf of, and jointly with, the FIAU in conducting AML/CFT supervision of MFSA authorised entities. This model is replicated with the Sanctions Monitoring Board with whom the MFSA collaborates to ensure that licence holders comp ..

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