The role of the Supervision Section, stems from Article 16(1)(c) of the PMLA. It revolves around monitoring AML/CFT compliance by subject persons who carry out relevant financial business or relevant activity in terms of Regulation 2 of the PMLFTR. The fulfilment of this role is based on two main pillars:
- Identification and assessment of ML/FT risks posed by subject persons; and
- Supervision of adherence to AML/CFT obligations by subject persons
To perform these functions, the Supervision Section is split into teams, as outlined below.
This team is responsible for reviewing remediation plans announced by subject persons and for monitoring their implementation, whilst offering support in ensuring that the plans are effective in addressing the short comings identified during the supervision exercise.
The team also assists in the formulation of guidance to subject persons by providing feedback on examination outcomes and remediation initiatives.
Quality, Control and Coordination Team
This team is responsible for driving ongoing quality and coordination within the Supervision Section and its engagement with both local and foreign supervisory authorities.
It assists the supervisory teams in carrying out their function of monitoring compliance by subject persons with AML/CFT obligations and ensures quality and cohesion between the different supervisory teams. This team strives to achieve maximum coordination and harmonisation when collaborating with the MFSA and the MGA since both authorities have dedicated AML/CFT supervisory teams to carry out examinations on behalf of the FIAU.
The team is also responsible for ensuring swift collaboration with foreign authorities in line with EU legislation. It is also responsible for reviewing and updating the section’s policies and procedures ensuring they are continuously updated.
This team is responsible for co-ordinating the risk assessment process of subject persons to create an ML/FT risk profile for each subject person which is utilised to guide supervisory teams in implementing a risk-based approach to supervision.
To achieve this, the Risk team is responsible for formulating and applying the FIAU’s risk assessment methodology through the collection, analysing and assessing of data arising from various data sources, including information from subject persons themselves, from the prudential regulator and from the FIAU’s analytical function.
To ensure adequate supervisory coverage of all the sub-sectors in which subject persons operate, the Supervision team is split into three distinct teams:
- Credit and Financial Institutions Supervision
- Investments, VFAs and Gaming Supervision
- DNFBPs Supervision
Each team is mainly involved in conducting supervisory action to assess the subject person’s compliance with AML/CFT obligations. The latter stem from the PMLA, the PMLFTR and the FIAU’s Implementing Procedures. Supervisory action can be carried out through multiple methods, including on-site compliance examinations, off-site examinations and supervisory meetings.
The results of the risk assessment conducted by the Risk team are the foundation on which the Supervision team’s supervisory plan which details the method, frequency and intensity of supervision is based.