The Malta Financial Services Authority (MFSA) has issued its
findings following a thematic review focused on two core areas
relevant to financial institutions: outsourcing and other
third-party arrangements, and the safeguarding of clients'
funds. The exercise provides insight into the extent to which firms
are aligning with regulatory expectations and identifies several
areas requiring further attention.
Outsourcing and Third-Party Arrangements
The review found that many financial institutions continue to
face uncertainty when classifying service providers as either
outsourcing partners or third-party vendors. In some cases,
identical services were reported under both categories, suggesting
a lack of clarity around definitions. Internal functions such as
Compliance, Risk, and Internal Audit were sometimes not classified
as "critical or important," despite their clear relevance
under the applicable framework. The MFSA reiterated that governance
functions fall
