Dear CEO: MFSA calls on trustees and company service providers to strengthen governance structures

The Malta Financial Services Authority (MFSA) has called on trustees and company service providers (TCSPs) to improve their governance structures in order to be more in line with regulatory standards.

In a recently-issued “Dear CEO” letter, the MFSA outlined the results of a thematic review that focused on governance and compliance within the TCSP sector.

While the MFSA acknowledged the positive strides made by TCSPs in terms of investing in compliance tools and resources, it also highlighted a number of key areas for improvement to align practices with regulatory expectations.

This included instances where detailed minutes of meetings between Board of Directors were not retained, and others where a Director held multiple other roles, without implementing adequate mitigating measures and controls.

In the letter, the authority encouraged TCSPs to conduct gap analyses and take “prompt corrective actions where necessary,” to ensure compliance and strengthen their governance structure.

The MFSA stated that the letter acts as a roadmap for TCSPs in order to align their operations with the authority’s expectations.

The findings will also inform future supervisory activities, including upcoming thematic reviews planned for 2024.

Commenting on the findings, Petra Camilleri, MFSA Deputy Head of the TCSPs Supervision function, said: “TCSPs play a crucial role in facilitating business activity and acting as gatekeepers to Malta’s financial system.”

“Through this review, we positively observed an increased commitment to enhance governance structures and compliance practices. This is a testament to the sector’s dedication to maintaining high standards,” she continued.

She affirmed that the MFSA is confident that by sharing the best practices in the letter, there will be further improvements across the sector, aimed at “ensuring a more resilient TCSP sector in Malta.”

MFSA Chief Officer Supervision Christopher P. Buttigieg noted that the thematic review underscores the authority’s “ongoing commitment to fostering robust governance and compliance standards within Malta’s financial landscape.”

“While we commend the strides made by TCSPs, it’s imperative to continuously assess and enhance practices to ensure alignment with evolving regulatory expectations,” he added.

In a bid to continue providing guidance and support to drive enhancements in the governance and compliance culture within the sector, the MFSA will be organising an international conference at The Hilton Hotel on 7th May 2024. The conference will focus on Malta’s TCSP regulation, licensing process, and pioneering initiatives in this sector. It will also discuss the latest National Risk Assessment and efforts to combat financial crime within this sector.

In order to register for the event, visit MFSA’s website by clicking here.