Financial crime compliance, a key strategic priority for the MFSA

Most of the Moneyval report recommendations already implemented or work in progress

• MFSA has placed AML/CFT compliance as a key strategic priority, targeting the highest European standards

• A number of initiatives have already been implemented, ensuring extensive AML/CFT checks at every point of the supervisory lifecycle

• Increased number of supervisory visits for AML/CFT purposes in close collaboration with the FIAU

Aware of the increased sophistication of money laundering, the MFSA has in the past months invested significantly in enhancing its capacity in anti-money laundering standards, resources and procedures, drawing on extensive consultations with national and international organisations and experts. Following this consultation exercise, the MFSA launched its AML/CFT strategy in February. Among the key changes implemented over the past 12 months, the MFSA has:

• Established a dedicated Financial Crime Compliance function to better reflect the strategic importance of AML/CFT supervision as an intrinsic part of the MFSA’s prudential and conduct oversight. The set-up was strengthened further through the engagement of a team of international experts, enabling the MFSA to achieve an unprecedented level of depth and quality in its joint inspections of licence holders, working closely with the FIAU to increase the quality and intensity of its investigations. The additional resources have resulted in a substantial increase in the number of inspections carried out. • Introduced more in-depth and extensive AML/CFT checks throughout the supervisory lifecycle process, in particular the authorisation process has been made more stringent, with a focus on the shareholding structure, governance framework (including key functions), internal controls and business models presented. As a result of these rigorous checks, the number of applications refused in the first half of 2019 increased to 25% from the 10% pushed back in 2017.

• Published guidance with respect to “fit and proper” procedures to be applied at all stage of on-boarding processes, setting out due diligence expectations for licence applicants.

Addressed the recommendations in the Moneyval report, relating to the Register of Trust Ultimate Beneficiary Owners, by fully implementing the National Strategic Action Plan requirements on beneficial ownership information on trusts. This included the setting up of a register of beneficial owners of trust which will be extended to all trusts by 1 January 2020.

MFSA CEO, Joseph Cuschieri commented: “Money laundering is a significant challenge for regulatory authorities worldwide. Through our stronger interactions with foreign regulators and investment in our technical capacity and resources, we are achieving a better understanding on how corporate structures can be exploited for money laundering purposes. We will not be complacent – our commitment is to raise the bar in AML/CFT supervisory standards so that the MFSA can be a role model for financial crime compliance standards in Europe.”