The International Monetary Fund stated that the growth of blockchain industry in Malta poses a threat of money laundering and financial terrorism. IMF said this after its visits to the Island for inspection.
The Risk Of Money Laundering and Financial Terrorism
A local news outlet in Malta, the Times of Malta reported the outcome of the IMF’s’ inspection visit to Malta on the 24th of January. The visit which aimed at inspecting the blockchain industry, financial and remote gaming sectors, and the government’s citizenship-by-investment scheme was noted by the financial institution as high on their list of concern on possible anti-money laundering AML compliance violation.
The IMF cautioned the country which is widely famed as the “blockchain island” to ensure the local authorities make crypto services in the country are compliant with the AML requirements. IMF acknowledged the series of sound measures that have been put in place by Malta’s Financial Intelligence Analysis Unit, it still advocates for more intensified effort and immediate action to block loopholes in the supervisory and enforcement system.
The IMF mission expressed its concern over the increasing number of financial entities under supervision, the rapid growth of new products and the regulatory environment and the tightening of the labor market. This was noted to have placed the Malta Financial Services Authority under considerable strain. Thus, the IMF recommended among others that there should be the application of more sanctions and sharpening of their understanding of possible risk and regulation breaches.
IMF also expressed concerns over the real estate market and the shortage of labour and its strained infrastructure. Nevertheless, the country’s growth was regarded to be favourable.
Malta And Interaction With The Blockchain Industry
Malta has earned the status of the ‘island of blockchain” due to favorable legislation of the country that has made it a suitable abode for crypto and blockchain firms. There has been a massive influx of blockchain and crypto firms from countries where regulations are not suitable to the country in recent times.
Further, the crypto and blockchain growth in the country has been aided by three blockchain and crypto-related bills passed by the Malta parliament to aid the course. Also, the prime minister of the country, Joseph Muscat has endorsed cryptocurrency as being the inevitable future of money, making a case for its transformation at the last United Nations session.
Meanwhile, IMF has been making efforts to oversee the growth of cryptocurrency in the world and its relation to illicit use. The Marshall Islands was advised against launching its national cryptocurrency due to money laundering concerns.