MFSA scales up supervision 350% with 'Dear CEO' letters and academy training

The Malta Financial Services Authority has increased its supervisory engagements by 350% to over 1,800 in 2025, according to a new academic paper authored by its chief officer Christopher P. Buttigieg and Benjamin Ellul.

The jump follows a 160% expansion of the MFSA workforce to 575 people and the launch of the Financial Supervisors Academy, which provided specialised technical training.

But the paper, published on pre-publication platform SSRN, highlights a less obvious driver: a restructured communication strategy rolled out in 2024.

The MFSA complemented traditional supervisory methods with structured outreach in the form of industry guidance, circulars, technical conferences, and 'Dear CEO' letters.

Those letters have proved particularly effective in articulating supervisory expectations while shaping corporate compliance cultures, the paper states.

They disseminate findings from specific entities and cases, communicating the ensuing expectations to boards and senior leadership of other firms, thereby driving industry-wide change "without requiring the operationally resource intensive expenditure of executing individualised inspections across every licensed market participant".

The paper explains the regulatory scaling effect: "Crucially, by addressing these instruments to all licensed entities within a given sector, irrespective of whether they were included in the empirical inspection sample, the MFSA achieves a significant regulatory scaling effect. This structural approach effectively transmits a localised, sample based supervisory exercise into a binding, market wide behavioural signal."

For Malta's business community, the strategy signals a more efficient regulator that can stretch its resources further. But it also raises the compliance bar for every licensed firm.

Boards and senior leadership can no longer assume that an absence of direct inspection means the regulator has no view on their conduct. The MFSA is now systematically broadcasting its expectations across entire sectors.

The approach reduces the regulator's operational burden while increasing the reputational and legal risk for firms that ignore published signals. Compliance teams will need to monitor MFSA circulars and letters as closely as they monitor their own inspection schedules.