MFSA takes measures to increase efficiency and effectiveness ahead of MONEYVAL report

Dr Christopher P. Buttigieg, the Malta Financial Services Authority’s Chief Officer for Supervision, has insisted that Malta is ready to face the MONEYVAL test where financial supervision is concerned.

Participating in a webinar on MONEYVAL that was organised by the Malta Business Network last week, Buttigieg said that the Authority was continually taking measures to increase the level of efficiency and effectiveness of its operations.

“We’ve learned from the experience of a number of past cases, and we’ve taken action to enhance our policies, procedures, and also our institutional framework to make the MFSA stronger and more efficient”, he said.

Buttigieg noted that the Authority has invested heavily in capacity building and recruitment over the past couple of years to further bolster the teams tasked with supervising Malta’s financial sector.

The MFSA’s headcount is expected to reach 450 by the end of the year, marking an increase of over 150 new employees since 2018.

The Authority has implemented a detailed development programme aimed at upskilling its employees through specialist training to ensure that all employees have the required level of knowledge and skills.

This investment has resulted in ongoing training sessions, with both local and foreign experts being brought in to help train employees, as well as the establishment of a specialised financial supervisors academy which includes a focus on AML/CFT training.

Moreover, new functions within the Authority have also been set up to provide more focus on certain aspects of its supervisory role.

One such function is the Financial Crime Compliance team, which has 18 supervisors going up to 20 by the end of 2020. This function is responsible for carrying out inspections in tandem with the FIAU, which focus on AML/CFT processes.

AML/CFT has now also been included in all of the MFSA’s prudential assessments, in order to increase the degree of attention given to this supervisory element.

Additionally, the number of inspections carried out by the Authority have been increased substantially even in the face of the COVID-19 pandemic, with 350 inspections planned in 2020, a marked increase when one compares to the 168 that took place in 2018.

Buttigieg also drew attention to the work that the MFSA has been doing on the due diligence front, with the aim of continuing to strengthen its effectiveness as Malta’s financial watchdog.

“We’ve established a due diligence function which not only carries out due diligence at the authorisation stage but also throughout the lifecycle of a licence holder/individual”, he said, adding that this function operates within the structure of a new Enforcement Directorate that is strengthening the Authority’s enforcement arm.

Buttigieg said that the MFSA is taking a risk-based approach to its operations and supervisory activities, arguing that this is a crucial strategy that enables the regulator to better allocate its resources, supervisory programmes and procedures based on the unique risk profile of each firm.

“We’re refining our risk-based approach metrics to ensure that we have a horizontal approach to every firm and that by the end of the year we’ll have one system which classifies every licensed entity into high, medium, or low risk. This should guide our level of supervisory engagement with the industry even further”, he said.

Buttigieg said that the MFSA’s programme for reform forms part of the MFSA’s 3-year strategy, published in January 2019 and goes beyond MONEYVAL’s recommendations.

“We’re not just doing this for MONEYVAL”, he said. “This is all part of the MFSA’s long-term plan to strengthen Malta’s position as a financial services jurisdiction of choice for good business and serious players”.

The MFSA’s Chief Officer Supervision called for a comprehensive, clear jurisdictional strategy that looks beyond the MONEYVAL and COVID-19 scenarios and sets out a path for future sustainable growth of Malta’s financial services sector. He insisted that sectors with the most potential for growth (such as asset management, FinTech and insurance for example) should be identified and targeted, with frameworks being put into place to strengthen the ecosystem around them and mitigate any potential risks.

He said that such a strategy needs to be developed with all relevant stakeholders linked to Malta’s financial sector. Having everyone on board will be crucial to ensure successful implementation and sustainable growth in the future.