The Malta Financial Services Authority (MFSA) has appointed blockchain security firm CipherTrace to monitor activity by crypto businesses in Malta, local news agency The Times of Malta reports on March 11.

CipherTrace is now set to be responsible for overseeing regulatory processes and audit risk management of virtual asset businesses licensed in Malta, CipherTrace CEO Joseph Cuschier explained.

The United States-based blockchain security company will assist the MFSA in combating money laundering and financing terrorism risks associated with entities involved in crypto businesses.

As previously reported, the MFSA envisions coordinating interactions with crypto-related businesses such as initial coin offering (ICO) operators and crypto exchanges through virtual financial agents (VFA agents). Bringing a bridge between crypto operators and the island’s financial regulator, VFA agents can be represented by lawyers, accountants and auditors, which are set to do the due diligence of crypto businesses.

In October 2018, the Times of Malta reported that about two-thirds of VFA agents failed crypto agent certifications, despite examiners easing the test by revising the evaluation scheme.

The MFSA is reportedly expected to grant approvals to VFA agents by the end of March 2019. Once approved, VFA agents will be able to submit applications for operators like crypto exchanges, wallets and ICOs. To date, at least 29 of prospective VFA agents have applied for a license, the article says.

Recently, the International Monetary Fund (IMF) has stated that the MFSA had critical gaps in its oversight for Anti-Money Laundering (AML) and combating the financing of terrorism (CFT) regulations. The authority urged for urgent action in order to protect the financial sector and the broader economy from money laundering and terrorism financing risks.

Earlier in March, the Times of Malta reported that blockchain firms in Malta are still facing troubles with opening bank accounts. CipherTrace CEO Dave Jevans noted that banks often turn away crypto- and blockchain-related business due to a lack of knowledge about their practices.