In the last week, has claimed the International monetary Fund (IMF), the growth of the Blockchain in Malta have Laundry to significant risks of money and the financing of terrorism, in the economy of the island.

Malta is well known for its crypto-friendly policies, their efforts have earned this area the nickname of „Blockchain Island“. His push to become the international crypto-Hub, has, however, experienced both by global authorities as well as local oppositions criticism.

crypto-friendliness is one of the main priorities of the Maltese government

On the 24. January, the Times of Malta reported on the preliminary findings, presented by the IMF, allegedly after a visit to the island. The international organization highlighted that the Blockchain stand next to the Remote Gaming sectors and the citizenship program of the government — at the very top of their list of concerns about possible violations of money-laundering (AML).

in fact, the Blockchain is, since July of 2018, one of the top priorities of the Maltese government, as it approved three law proposals to the Blockchain, and Kryptos, with the aim to create a strong and transparent crypto-regulatory climate: the Digital Innovation Authority Act, the Innovative act of technological Arrangements and services, as well as the VFA-act (Virtual Financial Asset Act).

In announcing the Changes via Twitter, Silvio Schembri, the Junior Minister for financial services, the digital economy and Innovation in the office of the Maltese Prime Minister that the country is „the first jurisdiction in the world that give this room right safety claimed.“

In fact, has left in the course of the year 2018 a significant number of foreign cryptographic players who were confronted at home with regulatory difficulties — including the crypto exchanges, crypto — currency, OKex, Binance and BitBay-due to the development of a friendlier crypto-period in Malta. In addition, Malta has the lowest percentage of Corporation tax for international companies in the European Union — only 5 percent compared to an average of 22 per cent — what is for such a shift is also an attractive factor. Since these laws in other countries where crypto is either not regulated or prohibited, are hardly available, could Malta appear as a logical target.

Tim Byun, Chief Risk Officer, OKex, told Cointelegraph:

„What we love about Malta is that it offers a balanced and robust regulatory framework.“

In September 2018, the Maltese Prime Minister Joseph Muscat stressed the crypto-friendly Status of the country, while he turned at a summit meeting in New York at the United Nations.

„We are currently in exciting technological times. Therefore, we have established ourselves in Malta as a Blockchain-island, by regulated, as the first jurisdiction in the world, this new technology, which previously existed in a legal vacuum.“

In addition, Malta has in October 2018, together with seven other EU countries, a Declaration on the promotion of the Blockchain-use signed. Julie Myers Wood, CEO of the global investigations and security company, Guidepost Solutions, explained to Cointelegraph:

„Instead of waiting for global guidelines or merely the existing rules on the crypto-business, has developed Malta aggressively, in order to create a new regulatory framework for cryptocurrencies.“

1. November, the VFA-law came into force. So far, no licensed agents have been announced, as the process is still ongoing.

The creation of a crypto company in Malta may be more difficult than it seems — and the framework is in place to be

Despite the reputation of Malta, a country that is located in a Blockchain, and a bureaucracy has, seems to be the development of a crypto-company to be on the island very complex.

On 18. October, the Times of Malta reported that almost two-thirds of those for the certification of the Maltese crypto currency agents have applied, have failed. Since the entry into force of the VFA-law in the July 2018 examination, as well as a training course mandatory for all who wish to work as agents in the crypto sector of Malta. In the draft law it is stated that „agents“ practitioners such as lawyers, tax advisors and auditors, who may want to establish a connection between the operators of Initial Coin Offerings (ICO) or other providers of crypto-currency and the Supervisory authority of the island, the Malta Financial Services Authority (MFSA),.

According to the Times of Malta about 250 people took part in the exam, which is a series of Multiple-Choice containing questions. After it was detected that the percentage of successful candidates was classified as „extremely low“, the auditor allegedly a last-Minute decision to revise the evaluation scheme. Nevertheless, the success rate was only 39 percent.

Jonathan Galea, President of BitMalta, a local Non-Profit organization dedicated to the advocacy of the Blockchain and crypto-currencies and his doctoral thesis with the title „The impact of Bitcoin on the money laundering act“ in the past, wrote, told Cointelegraph that the domestic AML framework for this is crypto-companies made up of several layers.

in addition to the Anti-money laundering laws (AML) and Know-your-customer (KYC) rules imposed by the crypto-system of rules for the domestic authorities, there is the Fifth AML Directive, introduced in July 2018, EU-wide response to the investigations of the Offshore Leaks, which are under the name of Panama Papers known, and various terrorist attacks. According to Galea crypto are subject to exchanges and Wallet providers, in particular, of the Directive in Malta, as well as other crypto-agents, which are defined by the above VFA-law.

„All operators, agents and service providers who want to make Malta businesses, must strictly adhere to the requirements of the AMLFramework in Malta, which is always much higher than what is normally required at the European level. We recognize certain risks in connection with such a new industry like this [crypto], which are mainly associated with exchanges, and ICOs, and therefore do everything to solve them from the beginning. „

Daniele Bernardi, CEO of the financial consulting firm diamaon Group, is Malta’s physical presence, confirmed to Cointelegraph that the MFSA has divided its regulatory area into two sectors, after she had put the invoices for the Blockchain in force: Now, the Watchdog Blockchain and traditional shops, supervised separately — for both sectors, strict KYC and AML are, however, procedures prescribed, adds Bernardi. In his view money laundering with a crypto-currencies is in Malta, even less realistic:

„The real Problem in Malta is that there are no banks in Malta to open an account for crypto companies, as they fear to break the AML Directive. So if you have a lot of Bitcoin, not in Fiat to convert, you can complete the money laundering. „

Malta’s questionable past with the traditional financial sector hindered the acceptance of local Kryptos

While the Maltese government has managed to bring more transparency in the local crypto-space, is Malta’s history with the traditional financial sector is of little help, said Wood to Cointelegraph:

„In the past, of Malta in relation to the enforcement of financial crime itself had been in the traditional sectors in question. She is currently working on a detailed Plan to improve the framework for the financial security of a General nature, including the strengthening of its Department for financial investigations and the improvement of the Supervisory framework. Therefore, the Acquisition of Malta is in a new area for global regulatory bodies, including the IMF, of alarming importance.“

As Bloomberg writes, EU officials, Malta’s Individual Investor programme — a government initiative, the Maltese passports for 650,000 euros, sold to foreigners, but less so for other family members — largely as Controversial, since this could lead to an influx of dirty money into the European financial markets.

There are more concrete problems on the island, many of which have been investigated by the journalist Daphne Caruana Galizia, the Panama papers studied and claimed two close colleagues of Muscat had founded in the Land registry. According to Caruana Galizia, they used the companies to launder money and sell illegal passports to Russian citizens. Later she reported that Muscat’s wife had also filed their own Panamanian Shell company, which had allegedly perpetrated also suspicious activities. Finally, Caruana Galizias was Blog according to Bloomberg, the most-read news source in Malta, and there were 47 complaints, of which about 70 percent were allegedly submitted to government representatives. In October 2017 Caruana Galizia, a car bomb was killed.

In fact, it could be Malta’s effective implementation of controls and enforcement have a question about how Mike Carter, senior Director at Alvarez & Marsals disputes and investigations, to Cointelegraph, citing several concrete examples said:

„From 2013 to 2017, were only carried out 92 money laundering investigations. In July 2018, the European banking authority criticized the application and enforcement of money laundering laws in Malta and referred to the“ General and systematic shortcomings „. In 2018, the European moved, the Central Bank has initiated the banking license of the Pilatus Bank,which is since 2014 in Malta, and investigations in relation to the money laundering activities of the financial supervision Department of Malta. „

The inclusion of cryptographic transactions into the Mix would not help the local government necessarily, adds Carter, although painted the AML had been aware of officials allegedly problems:

„The Maltese government published its own assessment of the money laundering and the financing of terrorism, referred to the country as a high risk for foreign proceeds of criminal activities. This risk is of particular importance in relation to the crypto currency remarkable, since the Maltese stock exchange with bad checks the customer and transaction, would make monitoring this vulnerability even more pronounced.“

While the Maltese government has adopted the reputation of the „Blockchain-island“ and the opportunity for the development of a specific regulatory framework for crypto currencies grabs on preparing to fight with the EU, in particular, their history of international civil servants still sit up and take notice.

in the Meantime, alerted the local Opposition. 26. January, the Nationalist party (PN) questioned the efficiency of crypto-oriented policy of the government. The PN pointed to the recent closure of the DQR Group, a Blockchain company, which was relocated in April 2018 from Germany to Malta to find a friendlier environment for his company. Silvio Schembri argued, in particular, that the arrival of the company „would consolidate Malta’s reputation as a Blockchain Island“, as the arrival of the company was announced.

According to local media companies, Lovin Malta, the DQR had dismissed most of his staff after one of its main investors, the deutsche Bitcoin Mining company Genesis Mining, financial difficulties had been caused by the bear market.

As a reaction to the news has been argued by PN representatives, the government is not a sustainable strategy, the Blockchain-industry in the country to build and strengthen. The party said in a Malta Today quoted Declaration:

„If the government really wants, that Malta is the Blockchain-the island is, it should be solid and credible to attract investments of well-known companies and firms that are able to the entire Know-how for Malta to provide of workers in this innovative sector to grow and flourish. […] The government should ensure that […] a proper detailed investigation is carried out before the operators licenses to be issued. „

in response, the government criticised the PN violently because of „enormous hypocrisy“:

„The Opposition has put an enormous hypocrisy of the day, as they took advantage of the internal Situation of a company for their own purposes, and none of the six openpublic consultations on the Blockchain participated had.“

The Maltese Parliament had to turn to previously in this month, similar statements, as the PN chief Adrian Delia, his concern over an alleged activity deficiency in the domestic crypto-space in the last few weeks.

According to the Malta Independent, in which Delia is not directly quoted, he considered that „Malta by the government as a Bitcoin island has been touted, the government has to weigh in the Christmas holidays practically everything.“

following his Remarks, the Maltese returned the favor of a parliamentary Secretariat for financial services, the digital economy and Innovation, and claimed that the Maltese capital, Valletta, a „crypto-currencies such as Bitcoin would offer more security and protection“.

DQR-in-chief Kristian Haehndal assured that his company will not leave Malta, in spite of the crash.

We did not expect that [the market downturn] is going to meet our partners so quickly, but we will not remove us out of Malta, because to Give up part of the Blockchain-is philosophy. We are in the process of attracting new investors, and we are very close, our business operations to resume. “

The Gatt Tufigno Gauci Advocates for Cointelegraph received data according to the Maltese, has the government, more than 1,000 applications for the crypto-licenses, in accordance with the VFA-law.