Category: Regulatory

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MFSA organised a seminar titled: Due Diligence and Cybersecurity in Relation to DLT

Categories Blockchain, Cryptocurrency, Regulatory, Malta, The Blockchain Island, DLT Regulation, Smart Contracts, Technology, Trading, Regulation, Artificial Intelligence, Tokens, Conference, MFSA, DLT, Privacy

MFSA organised a seminar titled: Due Diligence and Cybersecurity in Relation to DLT


Last Tuesday, 11th September, MFSA organised a day seminar for those who work in the field of DLT and Fintech which took place at Corinthia Palace Attard. The seminar titled ‘Due Diligence and Cybersecurity in Relation to DLT’, discussed many challenging issues that the DLT is facing. Many topics were discussed during this seminar, with a particular focus on cybersecurity, hacking and fraud.

E&S Group was represented by its team who gained a better insight into this ever-growing space.

Speakers from around the world, (most notably coming from France, Germany, England and the USA), attended the seminar. They spoke about their concern about hackers’ attacks which are made every day, and also covering the topic of frauds. In fact, in the past few years, many banks have experienced some kind of attack, with the consequence of losing their customers’ money. As a result, this has made the DLT space to look like a high-risk sector. However, everyone working in a network is subjected to an attack. The speakers all agreed that the blockchain technology needs to implement some sort of due diligence on the platform, preventing any hacks and tarnishing the sector further.

Moreover, it was discussed that crypto investors should conduct a due diligence procedure, helping banks and exchanges to identify who is fraudulent or not. Those institutions that do not follow any due diligence procedures are subjected to hackers accessing customers’ wallets, thus resulting in the bankruptcy of the company. In order to prevent such theft in the sector, cryptographers are creating complex algorithms to prevent such wrongdoings. This will help maintain the system to stay safe in combination with constant checks done to make sure no access is given to intruders. Mrs Maria Vello from Cyber Defence Alliance pointed out that that hackers are not anonymous and many criminals who stole money from banks have been caught by police.

VFA Agents in DLT

The event also highlighted the importance of VFA Agents. Accountants, auditors and lawyers who are applying to become a licenced VFA Agents have to go through a rigorous procedure, including, an exam, an interview and the applicable due diligence. The MFSA stated that this procedure is important to eliminate any “bad practises” within the industry. Moreover, the licenced VFA Agents need to conduct the Financial instrument test on their clients, thus presenting all the required information, one of which being the white paper, to the authority.

Malta has become the leading jurisdiction to have a friendly approach on DLT sector. At E&S Group we have helped over 80 ICOs to launch their project in Malta. If you would like to join these companies but require further advice, please contact us at [email protected] or by telephone on +356 2010 3020. We make things happen!

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What is the 5th Anti Money Laundering Directive?

Categories Blockchain, Cryptocurrency, Regulatory, European Commission, European Parliament, Regulation

What is the 5th Anti Money Laundering Directive?

On the 19th of June 2018, the European Commission published the 5th Anti Money Laundering Directive (5AMLD) in the Official Journal of the European Union. This directive not only provides important updates and improvements to the 4AMLD but it also makes provisions for businesses that are operating within the cryptocurrency sphere.

When the previous Directive was announced in 2015, Bitcoin and some other currencies existed but no one could yet predict how much they, and the blockchain technology that underpins them, would go on to change the world we lived in. Now, in 2018, even if you are not using cryptocurrencies yourself, the chances are that you are, or are about to come into contact with blockchain. With everyone from shipping lines to central banks has begun to adopt this technology. Significant changes were needed to ensure companies operating both within the sector, and the EU is in full compliance with AML requirements.

The 5AMLD is not a ‘free-standing’ law, but rather it provides amendments to the previous 4AMLD, and it was being created at a time that most member states were still implementing the previous one. This was due to the fact that the industry moved at an incredible rate and the EU found itself in a situation where within a few months, the previous legislation had become outdated.

The most important elements of the 5AMLD pertain to the regulation of virtual currencies, information on beneficial owners, the use of prepaid cards, the powers of financial intelligence units, and due diligence for high-risk jurisdictions.

Virtual Currencies

The 5AMLD increases the scope of the EU regulatory perimeter in terms of AML/CFT controls and it makes specific reference to cryptocurrency exchanges as well as those that provide custodian wallet services. Under the new rules, both service providers are now “obliged entities” and are therefore subject to the requirements of the AMLD legislation.

The 5AMLD also requires all Member States to enforce mandatory registration of such providers and to report any suspicious activity that occurs on their platforms. This is designed to stop organised criminal activity from exploiting the anonymous nature of cryptocurrency and blockchain technology.

Beneficial Owners

The 5AMLD makes some very important changes to the EU regulations on both recording and disclosing the beneficial ownership of entities such as trusts and companies. Now, member states will be expected to impose sanctions and restrictions on any company that breaches the basic obligation of holding adequate and up-to-date information who is the beneficial owner.

The Directive also expands on the ability to access information pertaining to beneficial ownership- in the case of a corporate entity, for example, any member of the public is now entitled to the unrestricted information. In the case of trusts, regulators, FIUs and regular entities, as well as any natural or legal person with a demonstrable and legitimate interest, is able to access such information upon request. The EU stipulates that this access should not be limited to cases of pending litigation, but rather to those who facilitate preventative work in AML/CFT, as well as NGOs and investigative journalists.

All information on beneficial ownership is to be held on a central registry and should be available both locally and on a cross-border basis within the EU. All member state registers will be connected via the ‘European Central Platform’ which will be established under the Company Law Directive.

Financial Intelligence Units

Under the new Directive, FIUs will have total access to information provided by any obliged entity including exchanges and wallet providers. Furthermore, the 5AMLD also provides for a situation where information can be obtained by the FIU without any prior report needing to have been made.

Enhanced Due Diligence for High-Risk Countries

The 5AMLD imposes much tougher due diligence criteria on business relationships and transactions that involve high-risk jurisdictions. These requirements include acquiring additional information on the customer as well as the beneficial owner, the sources of funds and wealth, reasons for executing the transaction, and the necessity to have senior management approval to continue the relationship. The Directive also suggests that member states should impose restrictions on transactions or relationships with institutions from high-risk jurisdictions and it may require EU Banks to terminate correspondent banking relationships with institutions that are deemed as operating in a high-risk jurisdiction.


To learn more about ICO Legal Services in Malta please follow this link.

Contact us directly on +356 20103020 or by email at [email protected] to find out more.

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Malta and the FATF- fighting money laundering and terrorism financing

Categories iGaming, Blockchain, Cryptocurrency, Regulatory, Malta, Technology, Trading, Regulation, Exchanges, DLT

Malta and the FATF- fighting money laundering and terrorism financing

Over the last decade, the island of Malta has firmly established itself as a leading jurisdiction for various sectors such as iGaming, financial services, and now, cryptocurrency and blockchain. This is due in part to its stringent approach to issues surrounding anti-money laundering and counter-terrorism procedures, including its adherence to the EU 4th Anti Money Laundering Directive, as well as being an active member of the international Financial Action Task Force (FATF).

The FATF is an organisation that is tasked with setting the global standards for AML/CTF as well as acting as a guardian of the financial system in terms of financial crime and illicit activities. Every four months, they release a list of non-reputable jurisdictions which are defined as those that have serious deficiencies in their AML/CFT legislation, or who are not cooperative. This list of so-called ‘rogue states’ is meant to guide cooperative countries when it comes to who they should do business with, and who requires more enhanced levels of due diligence and other verification processes.

The most recent list, published in July, includes Democratic People’s Republic of North Korea, Ethiopia, Iran, Pakistan, Serbia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia and Yemen. Deemed as no-reputable jurisdictions, entities are advised to exercise caution when handling financial businesses with them. Notably, most countries on the list are in the grip of some kind of conflict so it could be that the governmental infrastructure is not available to enforce such regulations in an efficient manner, rather than them simply refusing to cooperate.

Malta’s Financial Intelligence Analysis Unit (FIAU) uses each report as a guide to decide what kinds of businesses or individuals should be able to conduct financial businesses within the country. Malta is also an active member of the intergovernmental FTAF as well as adhering to the EU 4AMLD, meaning it takes a strict approach to due diligence on companies and obliged entities operating in the country.

E&S Group works with a wide range of clientele from every corner of the world, and as such, we undertake all necessary due diligence, enhanced due diligence, and know your customer processes as a standard. We are also able to advise our customers on creating the proper, compliance procedures to ensure that their business and the people that they do business with are in line with national and international AML/CFT requirements. Contact us today at +356 2010 3020 or by email on [email protected]

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How the EU 5th AML Directive will impact the world of digital currencies

Categories Blockchain, Cryptocurrency, Regulatory, European Commission, E&S Group, Technology, Regulation, Tokens, Wallet

How the EU 5th AML Directive will impact the world of digital currencies

On the 26th of April 2018, the European Parliament announced the Fifth Anti-Money Laundering Directive (5AMLD) which would provide significant amendments and updates to the 4AMLD as well as tackling the growing virtual currency sector. Member States of the European Union have until 2020 to transpose the directive into national law and to make sure that all businesses operating within their jurisdictions are in full compliance.

Providing much-needed clarity

As well as bringing European AML regulations in line with developments in the cryptocurrency sector, the Directive seeks to provide clarity to virtual currency businesses on the AML and CTF obligations that they are required to adhere to.

Bolstering the industry’s reputation

There is no doubt that these regulations are much needed. Many cryptocurrency cynics state the fact that crypto can be and is used for illicit activities as a reason why they do not wish to get involved with them. Many investors and companies are cautious to associate their brand with something that has ties to drugs, money laundering and financing terrorism. Whilst in a reality, the actual number of illicit transactions is much lower and less than people think, regulations like 5AMLD provide a much-needed confidence boost.

The 5AMLD fills a regulatory void that has previously allowed certain rogue entities allow users to exchange crypto for fiat without undertaking any, or little KYC or due diligence. These platforms then became a paradise for virtual currencies gained from dark market places, fraud, ransomware, and other illegal activities.

Two types of crypto-business

The new Directive pertains to two types of cryptocurrency business; providers that are engaged in exchange services between virtual currencies and virtual currencies (exchanges) and those that provide custodian wallet services where clients private keys are stored as a part of the service.

Under the new rules, both of these entities become ‘obliged entities’ and are therefore obliged to comply with the AML/CTF legislation, much in the same way that banks and other financial institutions are. They will also be required to implement stringent issues to counter money laundering and terrorist financing included KYC and strict due diligence as well as transaction monitoring. All entities will also be obliged to keep and maintain extensive records and to report all suspicious transactions immediately to the competent authority.

Pan-European standardisation

Most cryptocurrency businesses that operate within the EU have already implemented such procedures but the 5AMLD seeks to standardise it and ensure that it becomes law within each jurisdiction so that bad actors are prevented from continuing their operations. It is also hoped that the introduction of the 5AMLD will seek to create a European ecosystem that other states can use as a guide when it comes to implementing their own AML procedures.

If you operate or are planning to operate a cryptocurrency business then E&S Group can assist you in being compliant with all current, and imminent regulations. We can provide legal, fiscal, and compliance related advice to help you ensure that you are in adherence to all applicable regulations both locally, and at EU level. For enquires call on +356 2010 3020 or by email on [email protected]

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UK MP says blockchain can save the UK GBP 8bn

Categories Blockchain, Cryptocurrency, Regulatory, Technology

UK MP says blockchain can save the UK GBP 8bn

A British MP has made news by stating that blockchain technology could save taxpayers up to GBP 8 million. Eddie Hughes, a Conservative MP has stated that the British government needs to consider recruiting a Chief Blockchain Officer to enable an increase in trust and adoption of the fledgeling technology.

In a report issued, called ‘Unlocking Blockchain’ Hughes listed a number of other suggestions and recommendations that include an international blockchain competition and a UK blockchain developmental target. This target should provide “a long-term aim for government departments to make a 1% efficiency by embracing blockchain and other associated technologies.”

Enormous savings

This saving of 1% would amount to approximately GBP 8 billion and would be overseen by the chief officer whose duty it is to oversee the application of blockchain technology in British public services databases.

The report was created by a think-tank with Conservative ties known as Freer. It makes various suggestions that businesses stand to benefit from an increase in the adoption of blockchain technology and that it could provide funding for both the industry and the economy as a whole.

Solving the trust deficit

Also mentioned in the report is the issue of a “trust deficit” which is described as a lack of public trust in government institutions that were created as a result of the 2008 financial crisis. These combined with a number of high profile scandals including the misuse of parliamentary expense accounts and allegations of harassment against charity workers.

“After a never-ending litany of betrayals of trust and instances of overreach, the political and financial establishments, companies, and voluntary organisations that were once seen as pillars of the community, are often now held in little more than near contempt by citizens”

Mr Hughes suggests distributed ledger technology as a way that the government and its institutions are able to create more trust and transparency and as a result, increase the faith of the public.

“Blockchain provides traceability and clear provenance. The blockchain holds all of the data from the start of the transaction, so the full history of any asset that is on the ledger can be known. There is no need to audit vast amounts of data, as the blockchain itself is the audit trail.”

Increasing operational efficiency

Also stated in the report is the fact that 82% of retail professionals believe that the implementation of blockchain technology could drastically increase operational efficiency through the “automation of labour-intensive processes”– something that would also yield savings, potentially in the billions.

Hughes then mentioned a report carried out by Santander that talked about how banks could greatly reduce their costs that are associated with cross-border transactions, compliance with regulations, and securities trading if they adopt DLT technology. He goes on to state that there could be possible savings of up to $20 billion by 2020.

Another interesting part of the report cites a study by the Dubai Blockchain Strategy that predicts that up to 25.1 million economically productive hours could be reallocated as a result of significantly reduced document processing procedures.

Theresa May, the British Prime Minister has recommended that a full copy of the report be sent to every member of Parliament for their consideration.


Interested in ICOs Legislation in Malta? Contact us directly on +356 20103020 or by email at [email protected] to find out more.

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Germany offers special accounts to crypto firms

Categories Blockchain, Cryptocurrency, Regulatory, Bank, Technology, Tokens

Germany offers special accounts to crypto firms

Solarisbank, the Berlin-based BaaP institution has just announced the intention to launch a new banking service that will serve clients from the crypto and blockchain industry.

The soon-to-be-launched resource known as ‘Blockchain Factor’ will provide tailored financial management services to businesses that are directly, or indirectly dealing with cryptocurrency and blockchain related services.

The struggle to build banking relationships

Over the last couple of years, cryptocurrencies and related services have increased significantly in popularity yet many still struggle to build relationships with their banking providers. In some cases, many banks and other financial institutions have closed business accounts of companies such as exchanges and brokerages leaving these businesses stranded. But now, the German fintech company Solarisbank is planning to offer a solid banking solution complete with an account manager who fully understands the technology.

“The Blockchain Factory will be used by Solarisbank to offer banking services to companies whose business is directly or indirectly based on cryptocurrencies and blockchain technology — One example of these services is the ‘Blockchain Company Account’ for the banking business of blockchain companies,” Solarisbank explains.

“Furthermore, services for global cryptocurrency marketplaces will be made available to make it easier to buy and sell fiat currencies; such as the Solarisbank ‘Automated Trust Account’, an automated escrow account for cryptocurrency market places.” 

Since the bank’s inception back in 2016, they have done well to carve out a solid reputation in the fintech marketplace. After entering into a strategic partnership with MasterCard, they raised over $70 million in a Series B fundraising round with contributions from firms such as SBI Group, Visa, BBVA, Lakestar, and ABN Amro.

“There is high demand from the blockchain world for a licensed partner that forms the technological and regulatory bridge to traditional banking — as a technology company with a banking license, we are the natural partner,” Roland Folz, the CEO of Solarisbank said.

Establishing partnerships

The fintech bank has plans to establish partnerships with crypto companies that have banking and debit card requirements.

CTO of Sloraisbank, Peter Grosskopf explains: “The fiat world is not about to dissolve. We are moving towards a hybrid future, in which the blockchain world still has to prove itself.”

In June 2018, Binance announced that they had been able to successfully open a bank account in Malta, although the name of the bank has been kept strictly under wraps. Whether the Germans will lead by example and pave the way for not just crypto-friendly banking but fully fledged crypto departments within financial institutions remains to be seen.


To learn more about ICO Legal Services in Malta please follow this link.

Contact us directly on +356 20103020 or by email at [email protected] to find out more.

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Lithuania announces guidelines for cases when ICOs qualify as securities

Categories Blockchain, Cryptocurrency, Regulatory, ICOs, Tokens, Securities

Lithuania announces guidelines for cases when ICOs qualify as securities

The Lithuanian Ministry of Finance has announced the issuance of guidelines regarding initial coin offerings (ICOs) as well as outlining when cryptographic tokens could be considered as securities and how each token sale can be regulated by various laws within the country.

In a document published on Friday, a definition was outlined that would “grant profits or governance rights” to any investor that obtains the tokens via means of ICOs.

Whilst the existing civil code, in theory, should apply to all of the projects with tokens that can be used as a payment tool, a variety of financial regulations should apply if a token grants profits or governance rights.

Guidance on tokens

The ministry of finance drills down further into ICOs and provides guidance on tokens that are issued, the entity that organises the sale, and whether it participates in a secondary market exchange. It will also consider whether the ICO is a crowdfunding activity.

The framework states that these aspects should be regulated by laws that are already in place in Lithuania, such as those that govern crowdfunding, securities, and financial instruments markets. Whilst the ministry has said that the framework is not a formal bit of legislation, it does aim to use it to bring transparency to the industry so that ICOs can grow in a more regulated environment.

“ICO market has not been regulated yet. It has huge potential but there are risks that we must manage. We should make our efforts for Lithuania to become the main headquarters for those ICO project promoters who are willing to operate in a transparent and orderly legal environment”, Vilius Šapoka, Minister of Finance said in a statement.

In addition to these financial regulations, the announced guidelines will also offer forth thoughts from the country’s taxation, auditing and financial crime investigation agencies in terms of how tax and (AML) Anti Money Laundering rules should be applied. For example, the guidelines put forward a suggestion that investors’ income that is received from an individual purchase and sales of cryptocurrencies should be taxed at the standard 15% income tax rate.


Are you looking for ICO Legal Advice? Click this link to know more.

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Bitmora, a crypto exchange company is moving to Malta.

Categories Blockchain, Cryptocurrency, Regulatory, Malta, The Blockchain Island, Cryptocurrency Exchange

Bitmora, a crypto exchange company is moving to Malta.

For every company, the launch of a product is an exciting time to be in, however, state governments are bringing many problems for cryptocurrency exchange companies. Bitmora, a crypto exchange company announced its intention to expand their offices to Malta, hence postponing its US official launch.

Recently problems on cryptocurrencies started to arise in the United States. Moreover, the SEC is treating all ICO companies as securities, thus moving away from becoming a crypto friendly country. Bitmora stated that while dealing with US banks, problems with regulations started to arise. Due to problematic encounters, Bitmora is moving away from the US jurisdiction.

Turning problems into success.

Bitmora has announced that it will shift its operations to the small nation-state of Malta. By far two prominent crypto exchange companies, Binance and OKEx have also stated their intentions to move their offices on the island. It is said that Bitmora’s decision to move to Malta was made when US regulations made it impossible for the organisation to function. For Malta, this is important news which can help the growing economy. More work opportunities are set to be created in the blockchain industry thus becoming the now dubbed “blockchain island.”

Since Bitmora is changing their launch date, it is thought that the US rigorous regulations have to blame, however, this is not the case. Developers are set to be working to improve Bitmora’s blockchain, developing a better platform for their customers.

In addition, the platform is set to become finalised and published on May 26th, 2018.

To know more about ICO legislation in Malta please follow this link.

Contact us directly on +356 20103020 or by mail at [email protected] to find out more.

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Maltese Gaming companies can follow specific GDPR guidelines presented by MGA.

Categories iGaming, Regulatory, Malta, GDPR

Maltese Gaming companies can follow specific GDPR guidelines presented by MGA.

Last Friday 4th May, the MGA released a document with specific guidelines on the new General Data Protection Regulation (GDPR) directive which will come to effect on May 25th, 2018 by the European Data Protection Board.

The EU Commission will enforce the GDPR directive for all EU states to follow. In effect, GDPR will be the catalyst to protect EU citizens from data privacy, thus guiding organisations across the region to observe data protection laws more seriously.

What will GDPR protect?

Previously, the EU has already passed a law on the data protection act across all EU countries. However, with the advancement of technology and scandals on big corporations stealing clients’ data from social media websites, the EU has come up with better and strict laws to protect its citizens.

The GDPR law has continued to build more specific laws on to the previous legislation which holds organisations accountable for the use and retention of personal data, enhancing individual’s rights to data privacy.

MGA guidance to GDPR

As an authority, the MGA acknowledges the Gaming industry concern about GDPR – compliance and how it can impact the industry. The MGA has presented a document to the gaming industry guiding them how to proceed. Before publishing the report, MGA has consulted with the Office of the Information and Data Protection Commissioner (IDPC), the supervisory authority responsible for regulating the application of data protection legislation. However, the MGA licensees are highly accountable to ensure all gaming companies are compliant with the GDPR and the gaming regulatory framework.

The authority expects that gaming companies will use these guidelines in par with the GDPR law. These guidelines will continuously be updated through a time when practical issues might arise. Gaming companies need to also take into consideration the legal requirements required to observe by the Maltese gaming laws without bypassing the current regulation. Also, the MGA guidelines and interpretations will not harm the Commissioner decision regarding complaints and other specific data protection issue.

The MGA has concluded the interpretations which are without prejudice for other guidelines or opinions which might be subjected by the Article 29 Data Protection Working Party.

Are you looking for services with regards to the gaming industry in Malta? Click this link for further information.


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Malta has the largest cryptocurrency by trading volume.

Categories Blockchain, Cryptocurrency, Regulatory, ICOs, Malta, The Blockchain Island

Malta has the largest cryptocurrency by trading volume.

An analyst from Morgan Stanley, Sheena Shah, published a report about cryptocurrency exchange. This research measured the trading volumes of cryptocurrencies found on all legal exchanges around the world.

A team conducted by Morgan Stanley, (an American investment banking company), were surprised to find out that Malta is leading in virtual currency trading volume. This study found astonishing conclusions, stating that the most cryptocurrency exchanges are done in the UK and are processed through exchange companies registered in Malta. In contrast, the UK accounts for 1% of global trade volume.

The crypto exchange industry is growing each day. Around the world, many people are opting to trade their fiat money to bitcoins or other altcoins found in the crypto market.

How did Malta obtain the highest trading volume of cryptocurrency exchange?

Last March, Binance, one of the world’s leader in crypto exchange, has expressed its plans to move its head offices to Malta. In their research, Ms Shah’s team stated that if Binance did not choose to move to Malta, the island would be “much further down the list.”

In a statement, “Binance said that it was moving away from Asia (currently registered in Hong Kong) due to more stringent regulation, especially from Japan. The third-largest exchange, OKEx, also recently announced that it was opening an office in Malta as the government markets itself as “The Blockchain Island”.”

In the report presented by Ms Shah, it states that:

“The blockchain and cryptocurrency industry is growing rapidly and can have economic benefits for a particular country through the creation of start-ups…, research and development and financial transactions.” Due to this, the “Governments are having to consider their regulatory stance quickly.”

Many blockchain companies are looking for countries that offer attractive regulations such as Malta. It is a known fact that crypto companies are looking to operate in countries offering a “regulatory certainty” with low tax rates to operate their business. In fact, Malta is offering crypto regulation certainty through its legislation and offering foreign companies low tax rates, encouraging them to work in Malta.

Last week the Maltese government presented three bills to parliament on blockchain and cryptocurrency regulation. Through these set rules, the Maltese government is hoping to attract more blockchain based companies to open up or transfer their offices on the island. With these leading blockchain companies, Malta’s dream to become the Blockchain island will become a reality.

Interested in Learning More about ICOs Legislation in Malta? Contact us directly on +356 20103020 or by mail at [email protected] to find out more.

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