Financial Services Regulation |  Oct 21, 2015

MFSA conduct a Thematic Review on Governance, Compliance and Risk Management

With the intent to verify the extent to which entities licensed in Malta have proper governance, compliance and risk management procedures in place and whether these are actually being complied with and applied in practice, during 2015 and 2016 the MFSA visited the offices of 21 collective investment schemes (“CISs”) and Fund Managers duly licensed in Malta.

On the 15th October 2015 the MFSA published a letter addressed to the Directors and Compliance Officers of CISs and Fund Managers wherein it set out the key findings emerging from the said visits and also its recommendations so as to how to avoid the common pitfalls identified by the MFSA following such visits.

The letter is divided into the following 3 sections:

  1. Findings which were found common both in CISs as well as fund managers;
  2. Findings specific to CISs; and
  3. Findings specific to fund managers.

I. Findings common to both CISs and Fund Managers including matters relating to:

  • The establishment and maintenance of:
    • the conflict of interest policy and the conflict of interest register and the reporting of obligations of potential or actual conflict of interest;
    • breaches register;
    • Compliance and procedures manuals.
  • Board of Directors meetings and proceedings;
  • Disclosure and transparency with respect to the services which the licence holders are authorised to provide and communications with the clients/investors.

II. Findings specific to CISs relating to:

  • Active monitoring of service providers;
  • Appointment and support of the compliance officer and MLRO;

III. Findings specific to fund managers relating to:

  • Investment Committee meetings which should be physically held in Malta;
  • Deficiencies in the investment process;
  • Active testing of Business Continuity Plan and Disaster Recovery Plan.

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