MFSA pushes Financial Institutions towards compliance with FIR/03
MFSA pushes Financial Institutions towards compliance with FIR/03
The Malta Financial Services Authority (MFSA) urged financial institutions to enhance their methods for safeguarding clients' funds. This call to action follows a thematic review that identified deficiencies in current practices related to outsourcing arrangements and the protection of client assets.
The MFSA's review highlighted that some institutions lack robust oversight of third-party service providers, potentially exposing clients’ funds to increased risk. Additionally, the assessment revealed that certain entities do not have adequate measures in place to ensure the proper segregation and safeguarding of client assets.
In response to these findings, the MFSA has communicated its expectations through a "Dear CEO" letter, emphasising the necessity for financial institutions to:
- Conduct comprehensive due diligence on all outsourcing partners
- Implement stringent controls to monitor third-party activities
- Ensure clear segregation of client funds from the institution's own assets
- Regularly review and update internal policies to align with regulatory standards
The Authority has made it clear that failure to address these issues promptly may lead to regulatory action. Financial institutions are therefore encouraged to assess and, if necessary, overhaul their current practices to ensure the highest level of protection for their clients' funds.
This initiative is part of the MFSA's ongoing commitment to uphold the integrity of Malta's financial system and to protect consumers by ensuring that licensed entities adhere to best practices in safeguarding clients’ fund.