The Malta Financial Services Authority has launched an ambitious new strategy with a root-and-branch approach. Vision 2021 serves as a blueprint for the MFSA to be “a leading forward-looking financial services regulator, having the respect and trust of the industry and the general public, while contributing towards a strong financial sector”.
Introducing the MFSA's Vision 2021, Chief Executive Officer Joseph Cuschieri stated, “Over the past years the growth in the financial services market has significantly increased the scale of licenced entities falling under the Authority’s responsibility. Currently the MFSA is responsible for 2,300 licenced entities, varying in nature and complexity.”
“Our risk framework will be a key input in our strategic plan. At the MFSA, we aim to be proactive in monitoring the trends in the financial market and in identifying potential risks or indicators of misconduct at an early stage,” said Prof. John Mamo, MFSA Chairman.
From left to right: Minister for Finance Edward Scicluna; Parliamentary Secretary for Financial Services, Digital Economy and Innovation Silvio Schembri; Prime Minister Joseph Muscat; Chairman of MFSA Prof. John Mamo; CEO of MFSA Joseph Cuschieri.
MaltaProfile rounded up the key elements from the new Vision 2021:
The Vision 2021 outlines the MFSA’s FinTech Strategy, which includes the introduction of a ‘FinTech Regulatory Sandbox’, a platform where start-ups and firms can explore and test their innovative products, services, business models and delivery mechanisms in a specially designed environment.
The three-year strategy articulates the Authority’s approach to risk management, conduct, enforcement and anti-money laundering (AML)/counter-financing of terrorism (CFT) supervision. The MFSA’s key principles include:
- Systematically assessing a firm’s strategies and business models to identify any emerging risk.
- Looking at the behavioural drivers which are likely to increase misconduct, including the objectives and purposes of the firm, the attitude and behaviour, compliance and competence of the senior management, corporate governance, controls, processes and reporting lines.
- Monitoring the compliance of licensed firms with AML regulations.
- Co-operating with other financial regulatory bodies both locally and overseas to counter money laundering and terrorist financing.
- Engaging directly with firms, consumers and investors in order to better understand issues they face.
- As part of its efforts to strengthen its AML procedure, the MFSA has published a guidance note on Politically Exposed Persons (PEPs).
- In addition, the MFSA will publish an AML/CFT Supervisory Strategy, which will indicate how it intends to strengthen its supervision with the aim of achieving a higher degree of financial market integrity.
- Introducing a risk committee which will be responsible for the design, implementation and review of the risk management policies of the Authority.
- Setting up an audit committee which will provide further assessment of the governance structure.
The MFSA is committed to addressing the current skills gap in the market. To develop the necessary study programmes and strengthen knowledge in the field of financial services, the MFSA will be collaborating with the University of Malta and possibly other educational institutions.
The regulator intends to issue ‘Guidelines on cybersecurity for regulated entities’ with the aim of enhancing licence holders’ cyber-resilience, particularly for companies which are dependent on technology.
It is being proposed that an ‘Academy of Excellence for Financial Supervisors’ is established to provide a yearly curriculum to train young and upcoming financial services supervisors, and to also ensure that experienced supervisors are given the opportunity to grow further and update their knowledge in this field, particularly with regard to techniques in financial supervision.
The MFSA is undertaking a Business Process Reengineering (BPR) project to “define internal standards and policies; to remodel internal processes in order to improve efficiency and efficacy; to adjust remits, handbooks and task descriptions; to update organisational structures and define new functions; to enhance internal communication; to enhance business intelligence and risk management; in workflow management and business continuity; in data and document management; and to enhance cross-unit collaboration”.
The Authority has replaced its old website with a new more user-centric website. In addition, the Authority is proposing to implement an interactive rulebook, which facilitates access to the regulatory framework, similar to those implemented by the European Banking Authority and the European Securities and Markets Authority.
The MFSA is implementing state-of-the-art supervisory technology named SupTech. It will assist the MFSA to automate certain processes and effectively make the supervision of licence holders more efficient.
The Licence Holder portal is currently being upgraded in order to accommodate additional business needs and recent European obligations. The portal will be renamed FinHub.
The document highlights that the Authority appreciates the importance of having a diverse and inclusive workplace. Therefore, the MFSA’s aim is to have a multicultural workforce to be in a better position to cater for the diversity of their customer base.
Photo - DOI: Pierre Sammut