MFSA unveils strategy to strengthen fight against financial crime

The Malta Financial Services Authority (MFSA) has published a new Financial Crime Compliance Strategy, setting out how it intends to strengthen the supervision of authorised financial institutions and align Malta's regulatory framework with major upcoming European Union anti-money laundering reforms.

The strategy widens the Authority's focus beyond anti-money laundering and countering the financing of terrorism (AML/CFT) to cover a wider range of financial crime risks, including proliferation financing, tax crime, fraud and sanctions evasion. The MFSA said the expanded scope reflects the increasingly interconnected nature of financial crime and the need for a more coordinated supervisory approach.

The Authority said the strategy is intended to build on previous frameworks while responding to developments in the EU's new financial crime regime. It aims to reinforce transparency, improve regulatory certainty and strengthen cooperation with both local and international stakeholders.

Central to the document are six strategic pillars that will guide the MFSA's supervisory work.

The first pillar focuses on a risk-based approach, with supervisory resources directed towards sectors and entities that present the highest financial crime risks. The Authority said it will continue to use information gathered from wider prudential supervision, including under the Digital Operational Resilience Act (DORA) and the Markets in Crypto-Assets Regulation (MiCA), to identify weaknesses that may indicate broader financial crime risks.

The second pillar centres on outcomes-based supervision, with the MFSA assessing whether regulatory interventions are producing the intended results rather than simply measuring technical compliance. The Authority said it will continue conducting thematic reviews and follow-up exercises to monitor improvements across the financial sector.

The strategy also places greater emphasis on supervising authorised entities throughout their entire lifecycle, from the authorisation stage onwards. The MFSA said it expects firms to maintain robust financial crime controls throughout their operations, while senior management will continue to be assessed on their ability to foster a strong compliance culture. The Authority also reaffirmed its role as a gatekeeper through ongoing fitness and properness assessments.

The remaining pillars focus on streamlining regulation, strengthening coordination with domestic and international regulators, and expanding industry outreach through guidance, training and direct engagement with financial institutions. The MFSA said these measures are intended to improve consistency, reduce regulatory duplication and support firms in understanding evolving compliance expectations.

In its concluding remarks, the Authority said the strategy will support earlier identification of financial crime risks through better use of supervisory information, while reinforcing Malta's alignment with international standards and maintaining the country's position as a resilient and well-regulated financial centre.