Issue link: https://maltatoday.uberflip.com/i/1360420
maltatoday | SUNDAY • 11 APRIL 2021 13 COMMERCIAL FIAU, which is the competent authority responsible for AML/ CFT supervision in Malta. The MFSA and FIAU have regular meetings to discuss develop- ments in the field of financial supervision and to coordinate our supervisory effort with the aim of achieving a higher degree of market integrity. During 2021, the Authori- ty aims to continue increasing the coverage of risk-based su- pervisory interactions. MFSA's supervisory engagement goes beyond the ordinary; we have enhanced the supervisory in- spections that the Authority car- ries out by visiting the premises of authorised persons or hold- ing them remotely due to the current environment caused by the COVID-19 pandemic. The engagement programme also includes the application and use of other supervisory tools such as supervisory meetings and mystery shopping exercises de- pending on the objectives of the MFSA, the identified risk areas, the risk profile of the authorised person and their business mod- el. Supervisory Interactions are either broad in scope to assess general compliance levels in multiple areas of supervisory focus, or have specific and the- matic focus areas to help iden- tify common findings and guide further initiatives to urge im- provement and avoid common pitfalls. During this year, the MFSA will expand its reporting on its public Supervisory & En- forcement Effectiveness Dash- board to include aggregate in- formation of such Supervisory Interactions. What is the MFSA planning for 2021 in terms of Supervision and how will the MFSA ensure that the financial services industry is safer for all those involved? The MFSA's supervisory plans and priorities for 2021 were published in November of last year. These include: [a] a con- tinued emphasis on the review of governance and systems and controls, which are key to en- suring that licensed entities are compliant; [b] a drive to raise the bar for compliance profes- sionals who are the regulators' extended arm in the industry; [c] a more detailed review of credit risk in the field of banking to- gether with quality of business planning, liquidity and cyber controls; [d] a thematic review of fees and costs and superviso- ry engagement of cross border activity, liquidity and control of assets in the field of asset man- agement; and [e] a focus on the effectiveness of internal controls in the context of outsourcing in the field of insurance. The supervision the Authority is carrying out is making a dif- ference with respect to stand- ards applied by financial services firms when providing services to their clients and in ensuring a safer and sounder financial system. For example, as a result of the MFSA's inspections, li- censed entities are generally re- quested to prepare remediation plans to address the identified weaknesses. In certain instances where key functionaries, such as the MLRO or the CO, are found to be weak, the MFSA requires licensed entities to replace the official or to carry out retrain- ing. If the identified weaknesses are systemic, for example weak customer due diligence or risk assessments, the MFSA may de- cide to take regulatory action, which may include the imposi- tion of an administrative pen- alty and/or the cancellation of the entity's licence. Regulatory action does not only serve as a mechanism to address identi- fied weaknesses and failures but also acts as a deterrent to dis- suade others from carrying out similar failures. What are the main challenges faced by the MFSA in terms of financial supervision? The main challenge is to keep raising standards of governance, compliance and conduct. This approach will ensure that the in- dustry becomes more conscious of the standards of compliance expected of them to ensure a sustainable future for the finan- cial services sector. The ever-increasing size and complexity of the sector meant that the MFSA needed to invest in continually strengthening its resources, including the capaci- ty and capabilities of its financial supervisors. We have come a long way and we are confident that the MFSA is on the right track to become an even more trusted and re- spected European financial su- pervisor. 'Honourable and rewarding'