MFSA provided an update on implementation of its Strategic Plan for 2019-2021. The document on strategic update takes stock of the overall progress made in the first two years of the strategic term and highlights the areas MFSA will focus on till the end of the current year, with a focus on the long-term sustainability of the financial services sector. After taking stock of the progress made in 2019-2020 and in recognition of the current and evolving uncertain and challenging operating landscape, MFSA considers it necessary to re-orient its focus toward sustainability, the creation of long-term value, and continued stability. This will also set the tone for the next strategic period starting 2022.
MFSA has recalibrated its position and regrouped its strategic priorities under three key areas, which are supervisory transformation, fostering a stronger compliance culture, and innovation and growth. MFSA highlights the following key points in the strategic update:
- Before the end of 2021 and progressively thereafter, supervisory processes will become more digitally centric and the convergence of risk modeling frameworks will be completed as MFSA aims for data (quantitative) risk driven supervision for all sectors.
- Going forward, MFSA will continue to strengthen and refine the data inputs and parameters underpinning all levels of its supervisory risk model allowing for improved trends analysis and vulnerability assessments related to stability and soundness, governance and risk management practices, money laundering and terrorist financing risks, cybersecurity risk, and adverse reputational impact at entity, sectoral, and cross-sectoral levels.
- During 2021 and beyond, MFSA will continue to upgrade and update supervisory policies and processes while encouraging digital transformation and adoption of best practices by regulated entities.
- MFSA will be reviewing the positive and any negative impact brought about by the implementation of EU regulations and seek to identify the means to ensure and facilitate market wide, consistent compliance with the requirements as early as possible. To this end, MFSA will be consulting with stakeholders, including experts in the field, and publishing a discussion paper during 2021, holding information and discussion meetings, and enhancing awareness and deeper understanding among various market players and investors. MFSA plans to steer its focus on the development of a supporting framework to facilitate the greening of finance, financing green investments, and creation of a sustainable finance node in Malta.
In addition, MFSA announced that it will not take the option to apply the provisions to insurance intermediaries and investment firms, which employ fewer than three persons as outlined under Article 17(1) of the Sustainable Finance Disclosure Regulation (SFDR). As a result, the SFDR shall not apply to such insurance intermediaries that provide insurance advice with regard to insurance‐based investment products and to investment firms that provide investment advice. Article 17(1) of the SFDR exempts insurance intermediaries that provide insurance advice with regard to insurance‐based investment products and investment firms that provide investment advice that are enterprises irrespective of their legal form, including natural persons and self-employed persons, provided that they employ fewer than three persons. Finally, MFSA notified about a webinar organized for Non-Executive Directors and professional advisors on the regulatory expectations of Bank boards. The webinar addressed various subjects including the role of the Non-Executive Director in business planning and stress testing, role of the Non-Executive Director in the oversight of a three lines of defense model, MFSA’s minimum engagement level for banks and interviews with Non-Executive Directors and anti-money laundering (AML) challenges facing banks and expected standards.
- Notification on Strategic Update
- Strategic Update (PDF)
- Circular on SFDR (PDF)
- Notification on Webinar
Keywords: Europe, Malta, Banking, Insurance, Securities, SFDR, Sustainable Finance, Climate Change Risk, ESG, Governance, Disclosures, Green Finance, Fintech, Credit Risk, MFSA
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.
The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.