The partnership will help MFSA reduce fraud and detect transactions with illegal sources of funds.
Malta’s financial service regulator, Malta Financial Services Authority (MFSA) has recently announced its partnership with U.S.-based cybersecurity firm Ciphertrace, Inc. to help with compliance monitoring of crypto assets.
Sources close to the move claim that Ciphertrace, as part of the collaboration, will monitor transactions that pass through local digital wallets and crypto exchanges including ICOs, to keep track of potential money laundering and terrorism financing violations.
Ciphertrace will be required to monitor & track every asset that passes through the virtual financial agents, despite following reasonable cautions by the VFAs to prevent cases of illegal financial flows by businesses and individuals.
According to a press release, Joseph Cuschieri, CEO, MFSA, said that the company is well aware of money laundering and financing of terrorism risks associated with entities operating in this sector, and the decision has been taken to engage Ciphertrace’s services in order to reduce fraud and track transactions with illegal sources of funds.
He added that Ciphertrace compliance monitoring will provide MFSA with strong oversight tools to automate regulatory processes and examine the risk management of virtual asset businesses licensed in Malta.
Founded by Silicon Valley entrepreneurs in 2015, Ciphertrace is a U.S.-based blockchain security company which, through its supervisory technology tool (Suptech), offers cryptocurrency forensics, cryptocurrency anti-money laundering, and blockchain threat intelligence solutions.
The company uses machine learning to de-anonymize transactions, helping regulators to assess and monitor the reliability of crypto asset businesses. The solution tracks the risk exposure of virtual asset businesses including collective investment schemes, cryptocurrency exchanges and ICOs to measure potential exposure.
Commenting on the partnership, Dave Jevans, CEO, Ciphertrace, said that its supervisory technology tool (Suptech) will allow MFSA to monitor the activities of crypto businesses both in pre- and post-authorization stage.
He claims that banks and other financial institutions have started using the Ciphertrace compliance monitoring tool to help decide reliability of virtual asset businesses as corporate customers. Jevans added that these insights help banks to avoid de-risking by turning away valuable customers in this fast-growing and lucrative sector.