A 28-page guidance document has been issued jointly by the MFSA and the FIAU in a bid to ease the bottlenecks for fintech companies who find it impossible to open bank accounts.

The government’s dream of Malta becoming the ‘Blockchain Island’ was being held back by operators’ frustration. However, sources had told The Sunday Times of Malta some months ago that banks preferred to turn away the business rather than to inadvertently get into trouble for allowing activity which could lead to money laundering.

The authorities had expressed hope that this situation would be eased once operators were actually licensed by the MFSA but the document is aimed at allaying the banks’ fear. It was issued after a period of consultation launched almost three months ago.

“The document is designed to assist institutions to acquire a better risk understanding of any such prospective customers,” it says.

The document is mainly aimed at blockchain, virtual currencies and artificial intelligence, and acknowledges the specialised nature of the technology involved

The ‘Guidance Document for Credit Institutions, Payment Institutions and Electronic Money Institutions opening accounts for fintechs’ had to walk the narrow tightrope between wanting banks to open accounts and respecting their autonomy.

One paragraph reassures them that the guidelines are “neither intended to replace institutions’ internal procedures, nor as an obligation for them to modify their risk appetite” ­– or, for all that matter, their obligations.

It goes on to explain that the guidelines should be seen as a way to explain the sector-specific risks and to complement their own due diligence procedures.

“Being subject to AML/CFT requirements and to a level of supervision equivalent to what is provided for under Directive (EU) 2015/849 should lower the risk that the activity being carried out by the fintech is abused for ML/TF purposes,” it reassures the sector.

The chapter stress the importance of the jurisdictions involved, adding that if the jurisdiction was “a high risk or non-reputable one”, the operator might find that risk of their regulatory status might increase through the association.

The document is mainly aimed at blockchain, virtual currencies and artificial intelligence, and acknowledges the specialised nature of the technology involved. “While it is not expected for a subject person to understand all the different forms of technology that may be used to provide financial services and/or products, it is also true that risk assessing prospective areas of activity or customers would require an understanding of the same,” it says, adding that having individuals with expertise in both technology and financial services should provide additional comfort as to the technology’s reliability.

The MFSA also published its ‘Guidance Notes on Cybersecurity’ as a minimum set of best practices and risk management procedures to effectively mitigate cyber risks.

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