IMF Suggests That Malta Has Insufficient AML and CFT Regulation

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IMF Suggests That Malta Has Insufficient AML and CFT Regulation

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The International Monetary Fund (IMF) has recommended immediate action on some critical gaps in Malta’s supervision for combating the Financing of Terrorism (CFT) and Anti-Money Laundering (AML). Times of Malta reported the news on 28 February 2019.

The IMF issued a comprehensive report (Financial System Stability Assessment Report) summarizing the quality of regulatory and supervisory framework in Malta, an assessment of its financial system and its ability to overcome the financial crisis.

IMF maintained that in order to address AML/CFT deficiencies, a multipronged approach is required. Moreover, financial stability can be affected by financial integrity risks. An efficient AML/CFT system is needed to safeguard the financial sector and broader economy against potential terrorist financing or money laundering threats.

Screening processes for beneficiary owner information are required according to the report. Moreover, monitoring risk-sensitive accounts such as digital assets, IIP-related funds, and e-gaming is the need of the hour.

In order to supervise blockchain related service providers, employment of more resources was recommended by the IMF.  The report stated that the Malta Financial Services Authority (MFSA) needs to upgrade its operational capacity to face the challenges of monitoring the increasing number of licensed financial institutions in an evolving regulatory setup.

Due to its crypto friendly and blockchain supportive environment, Malta is renowned all over the world. However, the IMF has raised concerns over possible AML compliance violations. In January, IMF maintained that due to the rapid growth of Malta’s financial sector, MFSA is under “considerable strain”. The IMF may have become wary of the success of Malta in the cryptocurrency field and might look to tighten its control in order to slow down the crypto adoption process.

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