Cryptocurrency News

Malta Partners with Crypto Security Firm to Curb Financial Crimes Risk

March 17, 2019
Saad Mohammad

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Malta Partners with Crypto Security Firm to Curb Financial Crimes Risk

The use cases for cryptocurrencies and their underlying technology, blockchain, continue to increase as more companies and organizations realize the potential of this new and innovative technology. The confidence in crypto companies continues to grow as well, and one of them is about to be used to help manage financial crimes risk in Malta.

Crypto security firm to help reduce financial crimes risk

The Malta Financial Services Authority (MFSA) announced on March 11 that it has collaborated with U.S. cybersecurity company Ciphertrace to reduce the risk of financial crimes in the digital currency industry.






The MFSA revealed that it would implement the Compliance Monitoring product designed by Ciphertrace to help it protect consumers, investors, as well as business partners in the country. Ciphertrace would be tasked with keeping track of transactions carried out on exchanges and digital wallets, especially for ICO transactions.

According to Ciphertrace’s official website, its compliance tool utilizes blockchain analytics and forensics to search for suspicious addresses and wallets. The company noted that it profiles crypto exchanges, Bitcoin ATMs, coin mixers, addresses of criminals, and other money laundering systems to score transactions and determine their level of risk.

This latest development comes at a time when the MFSA is reviewing 29 applications submitted by companies seeking approval to serve as virtual financial agents (VFAs) in Malta. The applications are expected to be approved by the end of the month, with the companies encouraged to submit further proposals to offer crypto exchange services afterward.

The CEO of MFSA, Joseph Cuschieri, stated the following:

“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.”

He added that Ciphertrace’s compliance monitoring tool would give the MFSA the necessary oversight tools to automate regulatory processes in the country and audit risk management of cryptocurrency businesses licensed in Malta.

Ciphertrace mentioned that the implementation of the monitoring tools would lead to risk ratings on Malta’s crypto operators. Dave Jevans, CEO of Ciphertrace stated the fowling:

“Cryptocurrency businesses often have difficulty establishing trust and maintaining banking relationships because of their perceived risk. The compliance monitoring tools can also help financial institutions to know which digital asset businesses they can trust and avoid turning away valuable customers.”

Ciphertrace’s tools to help build relationships with banks

The American-based security company developed a supervisory technology tool called Suptech that offers digital asset forensics, anti-money laundering, and blockchain threat intelligence solutions.

Crypto companies have faced challenges with traditional banks over the past few years due to money laundering, terrorist financing, and other similar fears. Ciphertrace, however, believes that by using Suptech, cryptocurrency companies would be able to build a better relationship with banks.

In Malta, banks have been reluctant to do business with crypto-related firms, but Ciphertrace revealed that the banks are now using the Suptech solution to analyze which cryptocurrency companies they would be able to work with.

Malta is one of the most crypto-friendly countries in the world and has passed laws that have attracted blockchain and cryptocurrency businesses. Even though they have recorded progress in this regard, the risk of financial crimes has increased, with the International Monetary Fund recently cautioning them to handle the crypto sector with care.

The country does not want to implement strict rules that would push away crypto businesses, hence the integration of the compliance monitoring tools. The regulatory bodies in Malta would be able to screen crypto businesses and eliminate the non-compliant ones. The success of the Suptech solution would be watched with keen eyes as regulators in other countries could adopt it for similar functions.