Online Gaming Super-Hub Malta Graylisted by Global Financial Crimes Watchdog, FATF

Posted on: June 24, 2021, 04:40h. 

Last updated on: June 25, 2021, 02:45h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

Malta was graylisted Wednesday by the Financial Action Task Force (FATF), a decision that could have far-reaching economic repercussions for one of the world’s foremost online gaming hubs.

FATF
Malta’s record on financial crime has not been as pretty as the skyline of its capital, Valetta, in recent years. (Image: New Statesman)

The tiny 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 FATF. Romania, also graylisted Wednesday, is the second.

FATF is an intergovernmental organization founded by the G7 to combat money laundering and terrorism financing. Its demotion of Malta’s financial status will stymie the country’s banking sector, making it less agile and more expensive to engage with.

This will decrease its attractiveness as an online gaming jurisdiction and for investors generally.

FATF Puts Malta on Trial

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

But graylisting means companies based in Malta will now be assumed to pose a higher risk and will be subject to more financial red tape.

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

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

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

It has faced international criticism for policies that include the sale of national passports and failing to act against government officials mentioned in the Panama Papers for owning secret offshore companies.

Government Collapse

The government was brought down in 2019 because of 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 anticorruption journalist Daphne Caruana Galizia.

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

After Galizia’s death, it emerged that a shadowy company Fenech controlled had been preparing to make large payments into shell accounts. The accounts were owned by Malta’s former energy minister, Konrad Mizzi, and then prime minister’s chief of staff, Keith Schembri.

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

Mob Rule

Malta’s gaming sector is responsible for some 12 percent of its GDP and hosts some of the biggest brand names in the industry. But parts of it have been infiltrated by the Mafia.

Periodic busts by Italian anti-mafia police have embarrassed the Malta Gaming Authority (MGA) over the past ten years, questioning its due diligence.

The most notorious came in 2015, when the MGA was forced to revoke the licenses of nine online gambling companies. These included BetUniq, whose CEO, Mario Gennaro, was the “point man” for the Calabrian Mafia, according to Italian prosecutors.

More recently, authorities broke up a Sicilian Mafia-linked gambling ring linked to the Malta-licensed website RaiseBet24.com.

Earlier this year, former MGA chief Heathcliff Farrugia was charged with corruption for trading in influence with accused murderer Fenech, while collusion has also been alleged between Fenech and Farrugia’s predecessor, Joseph Cuschieri.

Countries can be removed from the graylist if they achieve new targets set by FATF in improving their fight against money laundering.