Issue link: https://maltatoday.uberflip.com/i/1264355
11 maltatoday | SUNDAY • 28 JUNE 2020 COMMERCIAL top level with our licence holders, to en- sure that the right tone is set at the top by placing compliance at the core of busi- ness operations. We also encourage them to reward their employees for doing the right thing for the end user – the con- sumer of financial services. We engage regularly with the industry players and the associations representing them and issue guidance and circulars to set out what we deem to be best practice. Enforcement also has an important role to play in this area. We are also working on publishing case studies, on an anony- mous basis, to educate our licensed enti- ties on what enforcement action we had taken in the case of certain breaches in the past. This helps licensed entities avoid mistakes which others have done. In recent years, Malta as a jurisdiction has received increased attention when it comes to money laundering. What role does the MFSA's Enforcement Directo- rate play in ensuring that the jurisdiction clamps down on money laundering? The MFSA plays a crucial role in the prevention and detection of money laun- dering. This includes the authorisation of the right types of entities and structures, and also integrating in its supervisory programmes the detection of any red flags that could lead to money laundering and terrorist financing risks. The regula- tor is moreover placing a lot of attention on training the industry to increase its awareness of the sector's vulnerabilities. In terms of enforcement action on money laundering, the MFSA is only em- powered to take action on breaches of legislation under its administration. The prevention of money laundering frame- work does not fall within the MFSA's re- mit insofar as enforcement. Having said that, we still keep tabs on money launder- ing enforcement, because if the relevant authorities take action in respect of a li- censed entity, this could impinge of the licensing status of that entity. Moreover, if there are AML/CFT (an- ti-money laundering/combatting the financing of terrorism) concerns, in all probability there will also be other con- cerns, such as those related to governance and internal controls. Therefore, we keep close tabs on these red flags as part of our supervisory and enforcement approach. The MFSA has invested strongly in up- ping the game when it comes to its efforts to fight financial crime. At the end of the day, however, it is up to the police's Economic Crimes Unit to pros- ecute when breaches are found. The number of prosecutions by the police remains low, however, and Malta risks grey-listing by Financial Action Task Force if it fails the Moneyval test later this year. Is this issue frustrating for you, as a regulator? The various institutions in Malta, in- cluding the MFSA, are cogs in a wheel, all working together with the ultimate ob- jective of ensuring the financial services sector is not abused of. Every institution has an important role to play and must do its job. The efforts being made should, in my view, not only be focused on working to- wards ensuring that Malta does not end up being greylisted by the Financial Ac- tion Task Force. We should also see it as an opportunity to improve the financial services sector, which is so important for the local economy. We must therefore work together to strengthen and make the sector more robust, and to prevent abuse. As a regulator, we have given top pri- ority to this aspect. We have been work- ing strongly on the integration of AML/ CFT in our supervision and have invested heavily in this regard. We find a lot of co- operation from other authorities and law enforcement agencies in the course of our work. There is an understanding that we have to work together for this ultimate objective, and we should continue im- proving along these lines. What is your vision when it comes to en- hancing the MFSA's enforcement? The Authority has been focusing sub- stantially on improving the timeliness of its investigations. In this regard we have adopted a risk-based approach, whereby high-impact cases are given priority. Such cases include those which could possibly cause huge detriment to the consumer. We must keep driving in this direction and working on increasing transparency. Educating the industry is another pri- ority, and the anonymous case studies I mentioned are part of this. The MFSA is also working on finalising a publication where it will be setting out the regulator's approach to enforcement. One of the messages we will be transmit- ting is that it pays a licence holder to vol- untarily come to us and admit that there were breaches undertaken on its part, and for it to then come up with a plan on how to redress any harm or detriment caused. Another project, which is still in its in- itial stages, involves strengthening the framework to ensure that there is more personal accountability of individuals in- volved in any misconduct. This will make it easier to pinpoint responsibility to in- dividuals who had a duty to detect and prevent breaches. Moving forward, in my view, as a juris- diction we should work towards adopting a model used in other jurisdictions where a forum is established within which not only the relevant authorities and law en- forcement agencies are represented, but also representatives from within the fi- nancial services industry. This will facil- itate intelligence sharing. We would, of course, need to ensure that there is the framework supporting such a kind of in- telligence sharing, but the way I see it is that this could help the transmission of important information. For instance, if one entity found an issue with a potential client as part of its due diligence process, that information could be shared with other licensed entities to avoid persons not having the right inten- tions accessing our financial services sec- tor. integrity and consumers Enforecement actions