In 2023, the investment sector accounted for the largest share of MFSA investigations

During 2023, the Malta Financial Services Authority (MFSA), as part of its remit, undertook a series of investigations into potential breaches of financial services law and/or regulations by entities or individuals authorised by the MFSA.

Following this, the investment sector accounted for the largest share of investigations in 2023, followed by insurance and pensions, and trustees and company service providers, respectively.

Reflecting on these findings, Chief Officer Enforcement Michelle Mizzi Buontempo stated that enforcement “is an important tool” in ensuring that the MFSA complies with its statutory obligations and delivers on its strategic priorities.

Overall, last year, the MFSA carried out 474 investigations, 25 per cent of which were related to persons or entities suspected of undertaking licensable activities without having obtained the necessary authorisations or scams.

Following the investigations 34 public warnings and consumer notices were issued by the authority.

The authority took 77 enforcement actions in 2023 alone, 60 of which were in the form of an administrative penalty.

“The meticulous work that has been carried out over the past two years, on the penalty calculation model and the resulting guidelines, is intended to provide more transparency on how we operate as a regulator,” Ms Mizzi Buontempo said.

Additionally, she notes that the introduction of the settlement policy and the revised administrative sanctions publication policy are some of the improvements introduced.

These measures ensure that any action taken “is dissuasive and effective whilst also being fair and proportionate in decisions.”

More than half of the investigations in 2023 were linked to late submissions of documentation. The rest addressed issues related to governance and internal control deficiencies, fitness and properness, market manipulation or abuse, misselling and financial crime, among others.

The investment sector held the largest share of investigations in 2023, followed by insurance and pensions, and trustees and company service providers, respectively.

Edward Grech, the MFSA’s Head of Enforcement highlighted that another objective for the authority is to ensure that the enforcement actions are fair, proportionate, dissuasive and effective, “intended to educate those subject to such actions.”

The total sum of penalties issued in 2023 amounted to €444,800 with approximately 80 per cent of the fines being related to non-submission of statutory documentation. The majority of these were imposed on collective investment schemes and insurance undertakings.

The MFSA urged the public to ensure the timely submission of all documentation, as per the deadlines set out in the applicable legislation and regulations, which is “of utmost importance” for it to be able to carry out its supervisory work.

“This enables the authority to understand whether licensed entities are complying with its rules,” the MFSA said.

Last year, the MFSA also entered into four settlement agreements which entailed the taking of administrative measures by the MFSA, which would have already been agreed to during the settlement discussions.  

Through these agreements, the MFSA intends to resolve investigations in the shortest time possible.