MFSA, SEC, Along with FCA Introduces New AML Guidelines for Money Laundering Officers and Virtual Asset Service Providers

The Malta Financial Services Authority (MFSA), Securities and Exchange Commission (SEC), and Financial Conduct Authority have developed a new set of anti-money laundering guidelines for Money Laundering Reporting Officers [MLROs] and Virtual Asset Service Providers [VASPs], aiming to limit the incidence of financial crimes.

The MFSA’s recently issued guidelines for MLROs are motivated by the insights drawn from the observations of the country’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) frameworks among the license holders and applicants. These critics were retrieved from more than 170 interviews with entities intended to become MLROs.

Christopher P. Buttigieg, the MFSA’s Chief Officer of Supervision, stated: “MLROs fulfill one of the most important functions in AML/CFT and act as conduits between the financial services sector and us as regulators. We are vested in providing guidance to MLROs and other key function holders who are ultimately in the best position to support them.”

The regulatory watchdog explained that money laundering and terrorist financing pose a significant risk to the financial industry’s stability. For this reason, regulators must ensure that the MLROs are equipped with essential expertise and knowledge.

In this latest guidance, the MFSA highlighted the most common issues that come to light while scrutinizing individuals for MLRO positions, paying particular attention to themes like autonomy, accountability, independence, knowledge, expertise, training, awareness, and time dedicated to the role. Additionally, self-assessment questions are included in the document as a resource for MLROs to utilize to establish the best investigation and reporting approaches.

The SEC has issued new policies for the registration, licensing, and screening process for VASPs. The regulatory body has emphasized that these checks are vital in combating crimes using digital currencies while preventing individuals with criminal records from collaborating as service providers with the crypto market. The SEC’s publication highlighted that these guidelines will enhance the current regulatory framework, showing the SEC’s commitment to ensuring the security of the digital crypto ecosystem while securing investors.

Additionally, the SEC revealed a new AML, CFT, and CPF onboarding manual in this guideline. This guideline is particularly legislated for VASPs to help them balance ongoing screening, registration, and licensing requirements. The main objective of this is to restrict criminals from being registered as service providers.

Like the US SEC, the UK’s Financial Conduct Authority (FCA) has also issued a new guideline pertaining to crypto businesses. Those issuing NFTs in the country will need to register with the FCA even after the government introduces a new regime for the crypto industry. The government has been strengthening the crypto regulations and is planning to bring crypto exchanges into a new crypto authorization regime. However, under current laws, all exchanges must be registered with the FCA to operate in the country. Once the new authorization rule is legislated, this won’t be mandatory. Additionally, according to the FCA’s document, crypto assets such as NFTs that are not used in relation to regulated financial services don’t come under the regime.

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