Maltese Financial Services Authority (MFSA) is tapping into the expertise of San-Francisco-based blockchain analytics and cyber-security company Ciphertrace to help in the tracking and regulation of virtual asset businesses and transactions.
Currently sitting on applications from at least 29 businesses applying for the Virtual Financial Agents (VFA) licenses, the financial regulator seeks to use Ciphertrace’s Suptech technology to combat money laundering and financial terrorism activities.
As reported by Maltese local news media The Times of Malta, once the pending applications have been approved for operation, they are expected to submit their modus operandi for either crypto exchanges, wallet services or ICO services. Ciphertrace will thus be responsible for overseeing their regulatory processes and auditing risk management procedures.
As reported by the Times of Malta, Joseph Cuschieri, the head of MFSA said that:
“Being strongly aware of the money laundering and financing of terrorism risks associated with entities operating in this sphere, the decision has been taken to engage the services of Ciphertrace in order to reduce fraud and detect transactions with illegal sources of funds.”
In addition, he spoke highly of Ciphertrace’s technology and how the regulator plans on employing it to avoid financial crimes through virtual asset businesses. He said:
“Ciphertrace compliance monitoring will provide the MFSA with powerful oversight tools to automate regulatory processes and audit the risk management of virtual asset businesses licensed in Malta.”
Engaging the services of Ciphertrace has multipronged benefits not just to the MFSA but the Maltese financial sector at large. First is the obvious benefit of discouraging money laundering and financing of terrorist activities through the virtual assets businesses.
The other benefit involves the traditional financial institutions that include banks that have been reluctant to work with Maltese digital assets businesses majorly because of lack of understanding of digital assets as well as the lack of clear regulatory procedures regarding virtual assets and businesses engaging in their trade.
However, now with the involvement of Ciphertrace, this precautionary measures can be waylaid in favor of Ciphertrace audit reports that have been vetted by the MFSA. Going forward, virtual assets businesses may find it easier to open bank accounts a process that has not been easy to do.