Financial watchdog stepped up onsite inspections last year by 36%

Onsite inspections by the financial services watchdog increased by 36% last year as it deepened the level of scrutiny with specialised foreign experts and technological innovation, the annual report shows.

The Malta Financial Services Authority carried out 227 supervisory visits in 2019, up from the 168 the previous year.

Figures published in the annual report tabled in parliament this afternoon show that 11% of those visits were related to anti-money laundering and the fight against terrorism financing.

Malta’s financial services sector has been under the spotlight of international monitoring bodies in recent years amid a lack of prosecutions related to money laundering.

The MFSA has embarked on a transformation to strengthen its regulatory functions and step up scrutiny of operators in the sector.

The authority, which until recently was still very paper based, also stepped up its investment in technology last year and human resources.

The annual report noted that assessments conducted during 2019 by the International Monetary Fund and the European Commission called for more investment in resources, more effective prudential and conduct supervision, financial crime compliance and enforcement action through improved staffing, skills, technology and data management.

The MFSA recruited American experts last year to boost its resources. The report said the MFSA employed 378 people by the end of 2019 and this was projected to increase further over the next few years.

New operational systems in support of the authority’s core functions were also launched or upgraded.

“The entire database system was upgraded to the latest version, with High Availability and Disaster Recovery sites configured to minimise risks of data loss, reinforce security and ensure business continuity. During the year, IT infrastructure, and end-user equipment, was upgraded to enable employee mobility and teleworking without compromising on security, confidentiality and data integrity,” the MFSA said.

But other technology investments covered cybersecurity, interfaces with government databases for the purposes of enhanced due diligence, software upgrades and disaster recovery arrangements.

The investment and recruitment drive have seen the MFSA’s operational expenses go up to €35.3 million from €24.1 million a year earlier.

According to the annual report, the MFSA supervises 2,265 active authorisations.

The financial services sector’s Gross Value Added increased by 2.3% last year to reach €657 million. This is equivalent to 6% of the economy.

At the end of 2019 there were approximately 12,230 people working in financial services industry, representing 4.9% of total employment in Malta.