The Enforcement Unit within the Malta Financial Services Authority (MFSA) has an investigative and enforcement role. It is responsible for reviewing the actions and where necessary conducting investigations of licence holders who have, or are suspected of having committed, serious compliance failures, serious misconduct, market abuse or any other serious breaches of the financial services law. It furthermore investigates the actions of persons carrying on financial services activities without having the necessary licence or authorisation. The Unit investigates suspicious or dubious schemes and takes appropriate action in such cases. In carrying out its investigative function, the Enforcement Unit 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 unauthorized persons. This is reported to the Financial Intelligence Analysis Unit (FIAU) and/or the police in accordance with legal requirements.
The Enforcement Unit may review or investigate cases referred to it by the Supervisory Council and may also investigate cases on its own initiative. It has a cross sectorial enforcement role and covers all areas falling under the MFSA’s supervisory function. Accordingly the Unit and the supervisory units work in close liaison and cooperation and coordinate their functions in order to ensure that the most appropriate and effective enforcement action is taken.
The Enforcement Unit exercises the enforcement powers of the MFSA under the MFSA Act and other financial services sectorial legislation, including the power to request and collect information and documentation, to conduct interviews of persons and to carry out inspections in order to collect information, establish facts and determine findings. The Enforcement Unit carries out the administrative procedures necessary to enforce the provisions of the MFSA Act, sectorial financial services legislation, regulations made thereunder as well as rules, directives, instructions and regulatory requirements issued by the MFSA.
The Enforcement Unit does not take decisions on enforcement action. The Unit communicates its findings to the decision making committee and makes recommendations for remedial action and/or the imposition of sanctions. This ensures the division of responsibility and separation between the entity that carries out investigations and prepares the enforcement case and the entity which takes decisions. The Enforcement Unit is then responsible for the implementation and follow-up of enforcement decisions.
The Enforcement Unit forms part of the SSM Enforcement and Sanctions Network of the European Central Bank. The remit of the Unit 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 Unit and from the Breach Reporting Mechanism.
The Enforcement Unit is also responsible for the issue of warnings to the public as and when appropriate about the activities of persons or entities, often operating through the internet, which are providing unauthorized financial services or operating dubious or possible fraudulent schemes.