FATF Greylists Online Gaming Super-Hub Malta for AML Faulires

Posted: Jun 24, 2021, 4:40 a.m.

Last update on: June 24, 2021, 5:11 a.m.

Malta was graylisted by the Financial Action Task Force (FATF) on Wednesday, a move that could have huge economic repercussions for one of the world’s leading online gambling centers.

FATF
Malta’s financial crime record has not been as good as the skyline for its capital, Valletta, in recent years. (Image: New statesman)

The small Mediterranean island state reluctantly finds itself on a list that includes Yemen, Syria, Myanmar, Nigeria and Burkina Faso. It has the dubious honor of being the first EU state to be sanctioned by the FATF. Romania, also on the gray list on Wednesday, is second.

The FATF is an intergovernmental organization founded by the G7 to fight against money laundering and the financing of terrorism. Its demotion of Malta’s financial status will hamper the country’s banking sector, making it less nimble and more expensive to hire.

This will reduce its appeal as an online gambling jurisdiction and for investors in general.

FATF puts Malta on trial

Operators were previously attracted by Malta’s competitive tax rate and a highly advantageous regulatory system, while its EU membership offered fluid financial services with the rest of Europe.

But the gray list means companies based in Malta will now be considered higher risk and be subject to more financial bureaucracy.

This makes everything from the movement of player funds to the distribution of dividends more difficult and more expensive.

Wednesday’s decision had been anticipated, although Malta passed an assessment by EU watchdog Moneyvaal in March.

According to the media outlet Lovin Malta, the country has become a hotbed of financial crime in recent years.

He has come under international criticism for policies that include selling national passports and failing to act against government officials mentioned in the Panama Papers for possession of secret offshore companies.

Government collapse

The government was overthrown in 2019 due to ties between its top politicians and the country’s largest casino owner, Yorgen Fenech.

Fenech is on trial, accused of ordering the car bomb assassination of Maltese anti-corruption journalist Daphne Caruana Galizia.

At the time she was killed in 2017, Galizia was investigating whether a government contract to build a power plant in Malta had been corruptly awarded to the Fenech business empire.

After Galizia’s death, it emerged that a ghost company controlled by Fenech had prepared to make large payments into fictitious accounts. The accounts belonged to former Malta energy minister Konrad Mizzi, and then to the Prime Minister’s chief of staff, Keith Schembri.

Fenech claimed that Schembri was the mastermind of the murder plot.

Law of the Populace

Malta’s gaming industry is responsible for around 12% of its GDP and is home to some of the biggest brands in the industry. But some parts have been infiltrated by the mafia.

Periodic arrests by Italian anti-mafia police have embarrassed the Malta Gaming Authority (MGA) for the past ten years, calling into question its due diligence.

The most famous came in 2015, when the MGA was forced to revoke the licenses of nine online gaming companies. These included BetUniq, whose CEO, Mario Gennaro, was “the key man” of the Calabrian mafia, according to Italian prosecutors.

More recently, authorities dismantled a gambling network linked to the Sicilian Mafia and linked to the Maltese licensed website RaiseBet24.com.

Earlier this year, former MGA chief Heathcliff Farrugia was charged with bribery for influence peddling with alleged murderer Fenech, while collusion was alleged between Fenech and his predecessor, Joseph Cuschieri.

Countries can be removed from the gray list if they achieve the new objectives set by the FATF by improving their fight against money laundering.

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