On 15 July 2020 the Malta Financial Services Authority (the "MFSA") issued a circular addressed to all licenced entities regarding their obligations in relation to record keeping.
The MFSA expects that licenced entities retain accurate documentation and records relating to their governance and oversight of regulated activity and their interaction with customers, in order to enable the MFSA to properly supervise them and protect customers.
In this regard, the MFSA outlined in the circular that the record keeping obligation extends to interactions with potential clients, whether or not they are eventually onboarded. Licenced entities are required to ensure that all correspondence relating to client contact and introduction, client acceptance, client on boarding as well as all ongoing correspondence throughout the relationship are retained centrally.
Additionally, the MFSA expects that licenced entities' records should be readily available for inspection by the MFSA as and when required. The authority, during the course of several onsite inspections carried out, has repeatedly encountered record keeping issues which have prevented it from carrying out an effective supervision of the licenced entities; for instance, records relating to clients, customers, beneficial owners or beneficiaries have been found to not being retained in an accessible format centrally, which has led to lack of cooperation with the MFSA and unnecessarily prolongation of onsite inspections.
In case the regulated entities are not able to comply promptly with the MFSA's information requirements, or pre-inspections and/or on-site requests, the MFSA's inspection would not proceed, and the regulated entity concerned may be deemed to have failed to cooperate with the authority.
A copy of the MFSA circular can be obtained by clicking here.
Originally published 4 August 2020.
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