Financial Crime Compliance in Malta

Oct 25, 2023

In today’s global economy, the fight against financial crime is more critical than ever. Within the ever-evolving global economic environment, Malta has become a great example of positive change since its removal from the grey list. Malta has achieved significant progress in securing its financial sector against illegal activities and strengthening its regulations. In this article, we will explore the role of the Malta Financial Services Authority (MFSA) in preventing financial crime and the regulatory framework in place to protect the nation’s financial sector.

The Role of the Malta Financial Services Authority (MFSA)

The MFSA plays a central role in protecting Malta’s financial system. It fights financial crimes, including money laundering, terrorist financing, fraud, and other illegal activities.

The MFSA regulates and supervises financial institutions, including banks, insurance companies, investment firms and more. Additionally, it sets strict standards and runs regular checks to ensure compliance with anti-money laundering (AML) and preventing the financing of terrorism (CFT) regulations.

Moreover, the MFSA is responsible for granting licenses to financial service providers and maintaining an updated register of licensed organisations. It also has the authority to impose sanctions, fines, and other measures on those who violate financial crime regulations.

Furthermore, the MFSA offers guidance to the financial services industry. It actively collaborates with other regulatory bodies, such as the Financial Intelligence Analysis Unit (FIAU). This collaboration involves exchanging information and intelligence for preventing and detecting financial crimes.

Regulations for Preventing Financial Crimes

Malta has implemented strict AML and CFT regulations in line with EU directives. These regulations require financial institutions to perform customer due diligence (CDD) and report suspicious transactions. They also mandate strict internal controls to identify and prevent money laundering and terrorist financing activities. In addition, the MFSA provides guidance on these regulations and conducts regular inspections to ensure compliance.

To increase transparency and fight illegitimate financial activities, Malta maintains a Beneficial Ownership Register. This register contains information about the beneficial owners of companies and other legal entities. Therefore, financial institutions are required to verify the beneficial ownership of their clients and report any discrepancies to the relevant authorities.

The MFSA encourages financial institutions to adopt a risk-based approach to compliance. This approach involves assessing the risks associated with different clients, products, and transactions and tailoring AML/CFT measures accordingly. It allows businesses to focus their resources on areas with higher risk, making compliance more effective.

Furthermore, Malta has implemented whistleblower protection provisions to encourage reporting of financial crimes within organizations. These precautions protect individuals who report wrongdoing from retaliation and ensure their anonymity, fostering a culture of reporting and accountability.

Additionally, Malta actively cooperates with international bodies and organisations, including the Financial Action Task Force (FATF), to fight financial crimes. This collaboration ensures that Malta remains aligned with global AML and CFT standards. It also signifies continues to strengthen its defences against financial criminals.

To conclude, in this dynamic global economy, fighting financial crime has never been more imperative. Malta’s journey toward positive change towards financial security not only benefits the nation’s economy but also serves as a positive example for other financial centres worldwide.

Malta’s commitment to fighting financial crimes is evident through its regulatory framework, which includes AML/CFT regulations, a beneficial ownership register, a risk-based approach, whistleblower protection and active international cooperation. By following these regulations and working closely with the MFSA, businesses in Malta can help ensure the integrity and security of the country’s financial sector while fostering a culture of compliance and accountability.





Interested in our work?

If you would like to learn more about GSI and our work, or you would like to cooperate with us, send us a message anytime.