MFSA announces its Supervisory Priorities for 2025

 

Supervised entities must show that compliance is embedded in their day-to-day operations, with the MFSA using quantitative and qualitative assessments to measure adherence. Regulated firms will be expected to demonstrate real improvements in areas such as risk mitigation, data accuracy, consumer protection, and digital resilience. 

 

 

MFSA’s 2025 Supervisory Focus Areas 

The MFSA will continue to focus on seven areas, while strengthening efforts in sustainable finance, digital resilience, and financial crime compliance: 
 

1. Strengthening Financial Stability 

• Financial institutions must enhance their governance frameworks, risk management, and capital adequacy to ensure resilience. 
   

2. Sustainable Finance & ESG Compliance 

• With the Corporate Sustainability Reporting Directive (CSRD) in force, the MFSA will assess whether financial institutions are meeting EU Taxonomy requirements and taking genuine steps towards sustainability, avoiding misleading claims. 
   

3. Digital Finance & Cybersecurity 

• As the Digital Operational Resilience Act (DORA) takes effect, entities must improve ICT risk management, cybersecurity resilience, and outsourcing controls. 
   

4. Governance, Risk & Compliance (GRC) 

• There will be continued scrutiny of corporate governance structures, board oversight, and internal controls to ensure accountability. 
   

5. Preventing Financial Crime 

• The MFSA will focus on the role of Money Laundering Reporting Officers (MLROs) and whether institutions have effective controls against terrorism financing, sanctions evasion, and proliferation financing. 
   

6. Consumer Protection & Financial Product Oversight 

• Financial firms must ensure greater transparency in marketing, sales practices, and complaints handling. 
   

7. Cross-Border Supervision 

• The MFSA will expand collaboration with European regulators to ensure that financial firms operating across different jurisdictions meet regulatory expectations. 

 

 

Sector-Specific Priorities Under the Compliance Outcomes-Based Approach 

 

In 2025, the MFSA will apply a Compliance Outcomes-Based Supervision approach across all financial sectors. This method ensures that regulatory requirements translate into measurable results, with firms required to demonstrate effective governance, risk management, and adherence to consumer protection standards. 

 

Sector-Specific Priorities 

• Banking: Strengthening stress testing, liquidity risk management, and credit risk governance. 

• Investment Services: Closer oversight of outsourcing arrangements, MiFID transaction reporting, and recovery planning. 

• Insurance & Pensions: Assessing risk management, financial reporting accuracy, and governance of reinsurance arrangements. 

• Company Service Providers (CSPs): Ensuring sound risk management and oversight of directorship responsibilities. 

• ICT & Cybersecurity: Strengthening compliance with DORA, particularly regarding third-party risk management. 

 

What This Means for Regulated Entities 

The MFSA’s approach in 2025 means that financial institutions must: 

• Review corporate governance and compliance frameworks 

• Improve cybersecurity and digital resilience in line with DORA 

• Ensure sustainability reporting is accurate and aligned with CSRD & EU Taxonomy 

• Strengthen AML/CFT controls to prevent financial crime and sanctions breaches 

• Increase transparency in financial product marketing and consumer disclosures 

The MFSA will continue issuing "Dear CEO" letters, outlining regulatory concerns and expectations to improve industry standards. 

 

How BDO Malta Can Assist 

Meeting regulatory expectations can be complex, especially with evolving compliance requirements across multiple sectors. Whether you require support in compliance reporting, risk management, cross-border compliance, DORA readiness, internal audits, or business risk assessments, our team is ready to assist.

Get in touch with BDO Malta at info@bdo.com.mt to discuss how we can help your organisation prepare for MFSA’s 2025 supervisory expectations. 

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