Enforcement Directorate


The MFSA has a range of enforcement powers emanating from the MFSA Act (Cap 330 of the Laws of Malta) and the various other sectorial financial services legislation.

The Enforcement Directorate has two functions, an Enforcement function and a Due Diligence function.

Enforcement Function

The Enforcement function is, inter alia, responsible for reviewing the actions and where necessary conducting investigations of licence holders who have or are suspected to have committed compliance failures, misconduct, market abuse or any other breaches of the laws administered by the Authority, or of any regulations or rules made thereunder. It furthermore investigates the actions of persons carrying out or suspected of carrying out financial services activities without having the necessary licence or authorisation. The Enforcement function also investigates suspicious or dubious schemes and takes appropriate action in such cases.

In carrying out its investigative duties, the Enforcement function may identify from time to time evidence or suspicion of financial crime such as money laundering, fraud, misappropriation, or other criminal conduct by both licensed and unauthorised persons. This is reported to the appropriate law enforcement agencies such as the Financial Intelligence Analysis Unit (“FIAU”) and/or the Malta Police in accordance with the legal requirements.

Due Diligence Function

The Due Diligence function is responsible for conducting due diligence checks on persons being proposed to take on approved positions within entities licensed by the MFSA. This necessitates a close collaboration between the different functions of the MFSA both of a supervisory and regulatory capacity, in order to carry out its work effectively. Among its many duties, the Due Diligence function is responsible for carrying out probity screenings in relation to all qualifying beneficial owners as well as key functionaries within a licensed entity. The Due Diligence function is also responsible for carrying out ongoing checks on a risk-based approach to verify that approved persons are still of good repute.

Enforcement Action

The Enforcement function communicates its findings to the decision-making body within the MFSA and makes recommendations for remedial action and/or the imposition of any appropriate enforcement action. The decision-making body considers these recommendations and takes a decision. The separation of the Enforcement function from the decision-making body ensures independence and fairness in the Authority’s decisions making process. The Enforcement function is then responsible for the implementation and follow-up of enforcement decisions.
The Enforcement function is also responsible for the publication of warnings and notices to the public as and when appropriate about the activities of persons or entities, often operating through the internet, which are providing unauthorised financial services or operating dubious or possible fraudulent schemes.

The Enforcement function forms part of the SSM Enforcement and Sanctions Network of the European Central Bank. The function’s remit therefore includes enforcement work in relation to banks, as may result out of supervisory work carried out by the Joint Supervisory Teams, the MFSA’s Banking Supervision function and from the Breach Reporting Mechanism.

Administrative Measures and Penalties

Article 16(8) of the MFSA Act provides that any administrative or disciplinary sanction or measure, of whatever type, including reprimands or warnings, imposed or decided by the Authority under any law for whose administration it is responsible, shall be published in such medium and in such manner and for such duration as may be deemed warranted by the circumstances and the nature and seriousness of the breach or wrongdoing.

Whistleblowing

The Protection of the Whistleblower Act (CAP. 527) aims to provide a framework for the protection of persons who expose improper practices such as misconduct and, or dishonest or illegal activity in an organisation. These persons are considered as “Whistleblowers”.

Whistleblowing is therefore the disclosure by a person of information regarding improper practices in an organisation.

The Enforcement function is the Whistleblowing Reporting function of the MFSA responsible for receiving and investigating external whistleblower reports falling within the remit of the MFSA in terms of the Protection of the Whistleblower Act.

Warnings

The MFSA warns the general public with regards to unlicensed or unauthorised entities and individuals, as well as fraudulent or dubious schemes claiming to be operating from the Maltese jurisdiction, while also bringing to the attention of the public similar warnings issued by European counterparties.

  MFSA Warnings

  Foreign Warnings

Report a Breach

The MFSA encourages people to report to it potential or actual breaches, committed by entities or individuals licenced or authorised by the Authority, or else unlicensed entities or unauthorised individuals who are suspected of undertaking licensable activities without prior authorisation from the MFSA. Consumers may report any breaches at https://www.mfsa.mt/about-us/contact/.