Malta risks being placed on FATF’s offshore list over Bitcoin support

The Financial Action Task Force (FATF) characterised Malta’s initiative to attract cryptocurrency startups as ‘problematic’, according to Times of Malta.

Experts questioned the effectiveness of the AML measures, despite the tightening of the regulatory framework in 2018 for the sector.

According to the organisation, the volume of bitcoin transactions through Malta since 2017, when authorities announced the national blockchain strategy, surpassed €60 billion ($71 billion).

The FATF flagged the regulatory ‘Wild West’ of 2017–2018 and an insufficient enforcement regime. Experts raised the question whether Malta should be included in the list of jurisdictions that do not do enough to curb large-scale financial crime.

The authorities noted that Malta accounts for only about 2% of global bitcoin transaction volume, and that the sector now enjoys robust regulation.

In 2018, several blockchain companies, including Binance, began operating in the country thanks to a one-year licensing deferral. According to sources cited by the Times of Malta, such a grace period led to a surge in high-risk transactions.

In November 2020, Malta’s regulator tentatively licensed the cryptocurrency payments platform Crypto.com.

In December 2020, ForkLog reported that local banks were unwilling to work with industry representatives, jeopardising plans to create a ‘blockchain island’.

Earlier, Maltese authorities warned investors about the risks of dealing with unlicensed cryptocurrency companies. At the time, they noted that Binance fell into that category.

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