MFSA Urges Stronger Financial Crime Controls

Thematic review identifies strengths and areas for improvement

The Malta Financial Services Authority (MFSA) has highlighted the importance of strengthening financial crime controls among credit institutions following a thematic review on terrorist financing (TF), proliferation financing (PF), and targeted financial sanctions (TFS) risks.

The findings, published in a Dear CEO Letter, outline both good practices and areas where banks are expected to enhance their governance, risk management and compliance frameworks. The Authority stressed that financial crime threats continue to evolve, requiring institutions to adopt robust and proportionate controls to identify, assess and mitigate emerging risks.

Banks urged to strengthen governance and risk management

According to the MFSA, credit institutions should ensure that TF, PF and TFS risks are assessed separately within their internal frameworks, while maintaining effective governance structures and a risk-based approach to compliance. The regulator also underlined the importance of senior management and boards in overseeing financial crime prevention measures and ensuring that internal systems remain effective.

Findings to shape future supervisory approach

The Authority noted that recent international developments, including findings by the Financial Action Task Force (FATF), demonstrate how financial crime risks are becoming increasingly sophisticated, with criminals using more complex methods and emerging technologies to evade sanctions and regulatory controls.

The MFSA said the thematic review will help shape its future supervisory approach to financial crime compliance, while encouraging credit institutions to review the findings alongside existing guidance issued by the Authority and the Financial Intelligence Analysis Unit (FIAU). It reaffirmed its commitment to supporting the sector in strengthening governance, monitoring and compliance standards to safeguard Malta’s financial system against evolving financial crime risks.

Sources and References

MFSA Highlights Key Findings from Its Thematic Review on Credit Institutions – MFSA