Category: Anti Money Laundering

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What are the pros and cons of KYC when it comes to ICO token sales?

Categories ICOs, ICO Legal Service, E&S Group, Tokenomics, Know Your Customer, Anti Money Laundering

What are the pros and cons of KYC when it comes to ICO token sales?

When it comes to the cryptomarket, KYC is one of the most hotly debated topics, otherwise known as Know Your Customer. The number of ICOs that are legally required to undertake KYC procedures on a daily basis is growing exponentially. Due to this, it is extremely important to have a clear understanding of the why, how, and what for is KYC in the world of crypto.

For those that don’t know, KYC is the process of verifying the identity of each and every client or customer. Every backer is supposed to go through the KYC procedure as well as to pass it before they can continue. This is a legal and regulatory requirement in many jurisdictions and helps ICO projects know that they are doing business with a legitimate entity.

Standard KYC procedures

Standard KYC checks require a scanned copy of the passport as well as requiring to make a “selfie” while holding the document to avoid issues of fake identity. In addition to this, proof of address is also often requested in the form of utility bills or bank statements. KYC is governed by AML regulations which stands for Anti Money Laundering, but AML can be a lot more in-depth.

If for example, and ICO project has a strong KYC procedure during the token generating event, it is a good sign of legitimacy for banks and it also means that the project is unlikely to encounter difficulties working with other financial institutions.

Drastically varying regulations

When we speak globally, KYC and AML regulations vary drastically depending on the jurisdiction.

Citizens of some countries such as India and China are not allowed to take part in ICOs, and then, of course, the US has its own set of peculiarities.

The main purpose of KYC is to verify an individual’s identity, something that is diametrically opposed to one of the key selling point of the sector – anonymity. But whilst this is something of a paradox, it does ensure the transparency of transactions and this is something that we cannot forget the importance of.

These are the main advantages of implementing KYC with your ICO:

  • Stopping scammers from maliciously taking part in ICOs
  • Stopping criminal acts such as money laundering
  • Keeping investors assets safe
  • Circumnavigating fiscal, legal, and reputational issues
  • Building credibility with banks

When it comes to AML, ensuring your KYC is up to speed is critical. By doing so, not only are you compliant with international regulations, but you are minimizing the number of critical acts whilst guaranteeing the safety of your token sale. In other words, it is a way of protecting ICO projects and those that back them whilst ensuring the utmost in transparency.

KYC can be undertaken at these different stages:

  • Before tokens are purchased
  • Before registration
  • Before the output of tokens

E&S Group takes matters of AML and KYC very seriously and ensuring the safety of its clients is paramount. Our team of legal and corporate professionals can assist with all matters in AML and KYC, ensuring you are compliant with the set legislation, to set up procedures for you to retain your integrity. Being up to speed on the requirements and knowing when to undertake different levels of KYC requires expert guidance. You can contact us here or by sending an email on [email protected].

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A brief overview of Malta’s Budget 2019 

Categories Blockchain, Cryptocurrency, Malta, Regulation, Artificial Intelligence, Know Your Customer, Anti Money Laundering, DLT, Budget

A brief overview of Malta’s Budget 2019

The Maltese Budget for 2019 is set to be announced on Monday 22nd of October, but what can we expect? Following the 2018 budget, 79% of the measures introduced within it were fulfilled during 2018, bringing to over 1,250 implemented measures over the last five years in total.

Entitled “Fostering a Quality Culture”, the Pre-Budget 2019 Document has given us some key points that we are expecting to be addressed in Monday’s reading.

Infrastructure

Investing in the country’s infrastructure, including public transport is expected to be a priority for the government, directly referencing the authority’s pledge to upgrade the national infrastructure over the next seven years. Other means of alternative transport are also expected to be announced as well as conceptual designs for the Malta-Gozo tunnel. Other areas expected to receive additional investment include maritime, aviation, and the digitization of The Lands Authority. The well-developed infrastructure can boost the real-estate growth and attract more foreign entrepreneurs and businessmen to the island on a permanent basis.

Regulatory Authorities

Following the implementation of the 4th AML Directive, the government is expected to announce further dedication towards addressing fiscal evasion as well as giving the Malta Customs greater investment towards non-invasive tools. The report also mentioned work that needs to be done at the stock exchange and the Malta Development Bank which focuses on SMEs and infrastructure projects supporting regional development.

New frameworks to be introduced will limit unnecessary expenditure, reduce inefficiencies, and create the Public Sector Performance and Evaluation Directorate. An extensive training programme, financed partially by the Structural Reform Support Programme, will improve human resources capacity. However, the competition on the labour market is not likely to decline due to the foreign companies entering the market with their employees on board.

Social Matters

The document addresses issues around housing and distribution of income and suggests that issues such as minimum wage, pensions, and tax refunds will be addressed.

The Environment

Waste management will be consolidated at Magħtab to provide a “national waste management nucleus” and to avoid unnecessary movement of vehicles. The government is expected to focus on a greener economy by announcing initiatives that will reduce the amount of waste and single-use plastic. Further work is expected on the Malta strategy to transition to a low-carbon economy.

The document also makes reference to conserving natural assets and taking necessary action, as well as simplifying the legal framework for agricultural operators, and reforming open vegetable markets. The government is also expected to continue its efforts to promote animal welfare, the sustainability of fish stocks, and the competitiveness of fishermen.

Let us hope that the solid part of the budget is dedicated to environmental improvement and conservation needs because the rapid development of the infrastructure is able to shake the balance between nature and technology.

Energy and Water

Water Services Corporation will continue to expand its distribution of new water as well as upgrading several reverse osmosis plants. The money will be invested in identifying significant flood risk areas and improving them, both across Malta and Gozo. Attention will also be given to decarbonising of the energy system and introducing further incentives to invest in renewable energy sources and increasing energy efficiency awareness.

Digital Innovation

A new legislation regarding online gaming is expected to be enforced, including new niches such as fantasy sports.

Blockchain is also expected to have a significant investment, as well as artificial intelligence, and the Internet of Things – all of which will be given significant support over the coming years.

Fintech and Regtech will be further developed as well as Islamic finance, and the MFSA will adopt a more modern structure making it more proactive. The international companies are waiting for the three regulatory acts to come into force to consider Malta as their new base.

Sustainability

Malta Enterprise will continue to support businesses by reducing costs and encouraging investment in research and development. Intellectual Property services will be restructured and a new trademark act will be created as well.

Malta Industrial Parks (MIP) will integrate business parks to accommodate clusters of industries in the same location whilst considering vertical or horizontal expansion. MIP will also consider private-public partnerships and a comprehensive master plan for the Luqa area.

Furthermore, student visas will be simplified for non-EU Students and the Malta Residency and Visa Programme will suggest changes to the law to make it more attractive, as well as exploring a visa action plan for foreign workers.

 

If you would like to know more about Malta’s budget plan this year and its influence on your industry, drop us a line by sending us an email on [email protected]

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A Second Blockchain & Bitcoin Conference in Malta

Categories Blockchain, Cryptocurrency, Malta, Bitcoin, Anti Money Laundering, Conference, DLT, Smile-Expo

A Second Blockchain & Bitcoin Conference in Malta

On October 23, Smile-Expo will conduct the second Blockchain & Bitcoin Conference in Malta. This meeting of top industry experts will become the 50th-anniversary event of the Blockchain & Bitcoin Conference series.

Malta was chosen as the country to organise such event, not by chance. Throughout the year, the island kept on hosting various conferences, summits and blockchain related events. One of the most DLT-friendly countries took the lead in a number of blockchain community members and visiting experts. The government drafted and will soon enact positive and encouraging ICO regulations, innovative bills with guidelines for the industry, and companies moving their businesses to the island – this is definitely a sign of successful technological development.

The guests participating in this event will have an opportunity to meet with 50 experts from top world corporations. Speakers will pay to such topics as blockchain in education, AML policy, and cryptocurrency trading. Apart from discussing the financial sphere, professionals will turn to the innovative usages of DLT. Invited speakers will share knowledge about DLT integration into transportation, gaming industry, real estate sector, the healthcare sphere, and AI. Crypto specialists will provide the existing use cases and will emphasize the advantages of the technology’s innovative implementation.

There are 5-panel discussions scheduled:

  • Blockchain and IoT.
  • The World Gets Tokenized.
  • Tales and Adventures of Blockchain Hacking.
  • ICO’s: Opportunity or Threat?
  • Legal and Regulatory Challenges in Blockchain.

E&S Group provides a range of services including ICO Legal Services, Corporate Services, iGaming, International Tax Planning, Financial Planning, Tokenomics, and take part at the event. If you are attending the Conference and you would like to meet our representative there, please contact us by sending an email on [email protected].

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The KYC Process for ICO Investors

Categories Blockchain, Cryptocurrency, Regulatory, ICOs, Malta, The Blockchain Island, Know Your Customer, Anti Money Laundering

The KYC Process for ICO Investors

As ICOs have gained popularity across the world, so are they coming under the watchful eyes of regulatory bodies and authorities now. Whilst many jurisdictions are not particularly clear on where they stand when it comes to ICOs, Know Your Customer (KYC) is a globally understood concept. Issuers of ICOs want to know who is investing in their project and investors want to know who they are dealing with – legitimate, trustworthy, and credible partnership.

But what is KYC and why do ICOs need it?

What is KYC?

KYC is an abbreviation for “Know Your Customer” and it refers to the process of a business or commercial entity, verifying the identity of its clients. It also helps to ascertain any risks of illegal intentions such as money laundering or the financing of terrorism.

By gathering KYC documents such as government-issued photographic ID, proof of address, and information on the source of any relevant funds, the company can establish the authenticity of an individual’s identity – something that is essential when dealing with money, assets, or other financial services. It is also important to know whether an investor or individual is a Politically Exposed person, a criminal, or someone that may pose a risk to the integrity of the business.

The undertaking of KYC is mandatory for many processes such as opening a bank account, forming a company, becoming a director in an enterprise, or even procuring the services of a lawyer or accountant. It is also becoming more prevalent in the world of cryptocurrency and ICOs as authorities and governments strive to regulate and legitimise the flourishing industry.

Why the world of finance needs KYC

The reason why KYC is needed in the world of finance is obvious – because many misbehaving actors attempt to use the financial system for nefarious activities. These can include setting up fraudulent structures, dodging tax, money laundering, proceeds of crime, facilitating bribery, or funding terrorist organisations.

The United Nations Office on Drugs and Crime estimates that around 5% of the global GDP is laundered each year, which translates to billions of euros, just through the European Union member states alone. When reputable businesses get inadvertently involved in such activities, the outcome can be devastating. Not only can they lose money and incur hefty penalties, but they risk irreparable reputational damage and even the closure of their business. As bad actors become more and more sophisticated in the way in which they circumvent KYC and AML laws, businesses have to be more dedicated in the way that they adhere to applicable regulations.

In the digital world, one of the fastest growing sectors, the use of KYC is even more important. Using the internet and cryptocurrency allows users a degree of customers anonymity which means that it is open to abuse. By ensuring that KYC is upheld, those operating in the cryptocurrency, blockchain, and ICO sector can enjoy a greater level of security.

KYC in Malta

Malta has recently introduced three new Bills that will regulate cryptocurrency, blockchain, and ICOs within the country. As well as these Malta-specific laws, businesses operating in and from the country must adhere to the EU 4th Anti Money Laundering Directive. It is also worth noting that the EU 5th Anti Money Laundering Directive is due to be implemented not later than January 2020, and it will provide more depth requirements for issuers of ICOs to satisfy.

Provisions in the new laws have put in place strict requirements that both ICO providers and investors must adhere to. Complying with such requirements offers many advantages including legitimacy, confidence and transparency. It will also allow ICO issuers to reach a wider global audience as well as to increase the number of jurisdictions in which the ICO offering can take place. Furthermore, many cryptocurrency exchanges are starting to refuse to list tokens or coins that are not compliant with AML and KYC regulations.

At E&S Group, we have the knowledge and the experience to help you create the applicable KYC processes that your ICO or startup needs. We have a full understanding of both local, EU and international laws and requirements in these areas and we can assist in advising and creating policies that will ensure full compliance with the law. Do not risk the integrity of your business and reputation, make sure you know who you are dealing with and operate on the right side of the law, at all times. Contact us today by sending us an email on [email protected] to find out more.

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Malta announces a delay in the introduction of new gambling regulations

Categories iGaming, Blockchain, Cryptocurrency, Malta, European Commission, The Blockchain Island, E&S Group, European Parliament, Technology, Regulation, Anti Money Laundering, Malta Gaming Authority

Malta announces a delay in the introduction of new gambling regulations

Malta is awaiting the introduction of its new gambling regulations, but news broke on the 28th that these would come a bit later than planned.

The reason for the delay is being cited as comments made by the European Commission and another EU Member State, pushing forward the implementation date to July 16th, and the start date back to August 1st.

The Malta Gaming Authority (MGA) said in a statement:

“Government and the MGA shall be reviewing and taking into account the recommendations made by the European Commission and the Member States.”

According to reports, detailed opinions were forthcoming from Finland, Poland, and the European Lotteries Association- all of which must be duly considered by the Maltese government and the MGA.

The changes to the existing law were proposed back in May 2017 and the new legislation was drafted after an extensive public consultation period with key local and international stakeholders. The new Gaming Act will replace the current rules and it is particularly focussed on licensing and the provision of gambling services. Once it comes into force, it will drastically simplify the licensing system by using just two categories of license- a B2B one and B2C one.

This new act is the first revision of the nations gaming laws since 2004 and as well as simplifying certain areas, it also aims to implement stricter controls and regulations to ensure that the industry is immune from money laundering, terrorist financing and other various financial crimes that are associated with gaming and sports betting.

This news comes alongside the announcement that the Maltese Parliament has approved three acts designed to regulate the cryptocurrency, blockchain, and ICO industries. The Virtual Financial Assets Act, the Malta Digital Innovation Authority Act, and the Innovative Technology Arrangement Act will seek to provide much sought after regulatory clarity, as well as providing support and encouragement for the burgeoning sector.

This is a world first and has put Malta on the map in the world of crypto and blockchain with the small EU state even being dubbed as the “Blockchain Island”.

With these new pieces of legislation for both the iGaming industry and the blockchain and cryptocurrency industry, it places Malta at the forefront of these disruptive and progressive global industries.

E&S Group can help operators within both industries set up their operations in Malta. We can assist with opening a company, applying for applicable licenses, adhering to regulations, and providing tax planning and associated services. To find out more, contact us on +356 2010 3020 or by email on [email protected]

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The Importance of Legal Advisors in ICOs and Blockchain Projects

Categories Blockchain, Cryptocurrency, ICOs, Law, GDPR, Tokenomics, Tokens, Guest Post, White Paper, Know Your Customer, Anti Money Laundering

The Importance of Legal Advisors in ICOs and Blockchain Projects

GUEST POST BY The Tokener

 

Legal advisors are like the internet connection. When you have it, you forget about the importance of it. Once you lose it you find out all the things you can’t do without it. It is easy to forget about the importance of a good legal advice, so let’s try and recollect all the important things legal advisors do for an ICO.

Setting up an ICO is not an easy task. There can be a lot of bumps down the road so it is essential to make sure that everything runs as smooth as possible. Roadblocks in the legal area are one of the main problems most ICOs encounter. Any legal issue that ICO encounters is a huge red flag for potential investors. Because of that, the best ICOs have a legal department on point.

Reputation

World of ICOs and Blockchain is still pretty unregulated, because of that, it is easy to damage the reputation of an ICO. This can happen for a wide variety of reasons – from false scam accusations to the unclear roadmap, or token use. Having an experienced legal advisor can save you from these issues.

The legal advisor should be familiar with and present in every key aspect of an ICO, starting from the whitepaper. First, you need to decide terms and conditions of your whitepaper. Every piece of content in the white paper has to get the green light from the legal advisor. Keep in mind that courts, investors, and regulators rely on the whitepaper to understand how the project will work.

Token Model

The token itself needs to be verified by the legal advisor. With your legal team, you will need to decide whether your token will be considered a payment token, utility token or asset token. This is a very important decision and different choices can lead to different outcomes in terms of the project compliance with the regulations.

KYC/AML Evaluation

When all of that has been done, you will need to make sure that your ICO complies with all the possible regulations. The most important ones are KYC/AML (Know Your Customer/Anti Money Laundering) regulations which help ensure that your project is safe and secure from potential scams. It is not an easy work; it takes a lot of knowledge in order for everything to run smoothly. The Blockchain industry regulations are just starting to kick in, so it is best to have an experienced legal advisor on the team.

Intellectual Property Protection

Imagine that you prepared everything for the start of an ICO campaign. Suddenly someone accuses you that you stole their logo. You should worry about the project, but now you are stuck in the legal labyrinth. This is a disaster! Because of this, legal advisors are essential. They will make sure that all your domain names, trademarks, copyrights, trade secrets and patents will be protected and will be acknowledged as your intellectual property. These are not the thing you want to worry about when preparing an ICO launch.

GDPR

GDPR (General Data Protection Regulation) is another thing your ICO will need to comply with. Without this, your ICO can’t reach its full potential. Having a GDPR protocol is now considered a standard in the world of ICOs. All of this is in the realm of your legal advisors.

Conclusion

Getting a legal advice might be the best first step of every ICO project. It will ensure that everything is protected and in sync with the regulations. The creative potential of the founders will not be held back by unnecessary legal troubles that may pop up. Everybody involved in the project can focus on what they do best and not worry about regulations.

If you are looking for a legal advice for your ICO, the best time to get one was yesterday, the next best time is right now. If you have any questions please contact us at [email protected] or phone us on +356 2010 3020. Visit this link for further information regarding our ICO Legal Services. We are here for you!

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