The Malta Financial Services Authority (MFSA) and the Financial Intelligence Analysis Unit (FIAU) jointly issued, on the 18th June 2019, Guidelines for financial institutions opening bank accounts for FinTechs. Both Authorities, being aware of the risks connected to technological innovation and the challenges faced by subject persons in assessing actual money laundering or financing of terrorism (“ML/FT”), have designed this guidance document to assist financial institutions in acquiring a better risk understanding and management in the field of fintech.
Fintech’s popularity increased with the rise of cryptocurrencies and blockchain technologies and Malta spearheading regulation in this field with the publication of the Virtual Financial Assets Act of 2018. Nevertheless, the lack of certainty and transparency in the legal status of tokens and cryptocurrencies was met by resistance from local banks in requests for the opening bank accounts creating significant difficulties for crypto companies that relocated to Malta due to its developed DLT (Distributed Ledger Technology) regulatory framework. The MFSA noted that it is not possible to attract new business in financial technology if such companies do not have access to the required banking services and that this stance by the banking sector is prohibiting important companies from contributing to the Maltese economy.
The implementation of these guidelines in the banking sector aim to mitigate the ML/FT risks that new technologies bring and to facilitate business by clarifying what the Authorities’ expectations are in these emergent sectors. The document also contains detailed information regarding the data which institutions should request from operators to determine their regulatory status and be aware of their activities.
The Guidance Document is not binding and it does not provide any derogation from any obligations that a subject person has to fulfil in terms of the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR) neither is it intended to place any kind of obligation on Financial Institutions to open a bank account for crypto companies. Therefore, it is important that these Guidelines are read together with the Implementing Procedures and any other relevant guidance or document issued by the FIAU, as well as within the context provided by the Prevention of Money Laundering and Funding of Terrorism Regulations.
Please contact any member of IURIS Advocates for any matter mentioned above.