In July, Malta was removed from the Financial Action Task Force greylist after being placed into increased monitoring in June 2021, in the news that sent ripples through the country’s iGaming and fintech sectors, causing some big names to flea.
Concerns have long been raised over Malta’s ability to deal with financial crime, money laundering and corruption. The assassination of an investigative journalist who was delving into stories linked to leading politicians was enough to put it on the map in that respect. But despite its difficulties, it persevered, and its gambling industry went from strength to strength, retaining its crown as one of the finest and most respected in the online gambling world.
But in June 2021, everything changed. The FATF made Malta the first European Union member state ever to be on the list. This is besides the fact Malta has laws in place and is also bound by bloc-wide rules on combatting money laundering and the financing of terrorism. Then, in July 2022, the FATF lifted Malta out of the grey list, praising it for the work it has done to combat the short fallings. So what were the main issues, and what has Malta done to fix them?
Beneficial ownership information
The FATF noted that the accuracy of beneficial ownership information was lacking, and gatekeepers were not always keeping it up to date. They found instances where ownership information was not recorded accurately and was not filed with the relevant authorities. This led to suspicions that some companies could be concealing ownership which is a big red flag in the world of AML and CFT. Now, Maltese companies must disclose all information relating to beneficial ownership, and if they do not, hefty fines are levied. Information on beneficial owners is also available on the Malta Business Registry website for a small fee.
Money laundering offences
Additionally, the FATF noted that the FIAU needed to step up the support given to the authorities about pursuing criminal offences relating to money laundering and tax evasion. The FATF noted that such cases were not prioritised adequately and that more enforcement was needed to clamp down on criminals and secure convictions. Top officials were replaced in the police and the licensing authority, and the number of inspections and reviews increased significantly.
Cracking down on tax evasion
The FATF also felt Malta was not doing enough to prosecute tax evasion cases, and they recommended that more resources were allocated for this purpose. This included improving and developing methodology, increasing cooperation between the police, the FIAU and tax authorities, enhancing expertise and providing training for professionals.
Earlier this year, the FATF found that Malta made “significant progress” in addressing the issues but noted work must continue going forward. Failure to do so could result in chaos for the gambling sector.
Malta and iGaming
Malta launched its iGaming license in 2002, and since then, it has grown to become one of the world’s leading iGaming jurisdictions, home to some of the biggest names in the business.
Even during the COVID-19 pandemic between 2020-2021, the gaming sector contributed 12% to the GDP.
But the greylisting was a big problem for Malta, and some big names packed up and left, choosing safer options like Kahnawake and the Isle of Man. In February 2022, Media and Games Invest SE, with a turnover of EUR 221 million, moved its registration from Malta to Sweden, with others following suit due to the situation.
In June, when the designation was lifted, several Malta-based stakeholders reacted. Some praised it as a demonstration of the government’s commitment to upholding the law, but others were more measured and said the country must be careful doesn’t slip back to its old ways.
But for some, the damage has already been done, and Malta will have to work hard to regain its reputation. While they hope to see an increase in new investors to the island, it is clear that many will be cautious about future instability and the risk of being placed on the grey list once again.
In May, before the greylisting was lifted, industry stakeholders were already worrying about over-regulation and its impact on their operations. Over-regulation would lead to the country’s uncompetitiveness which would, in turn, see a drop in licensees and future applicants.
Only time will tell what lies ahead for Malta, but for those looking to start an online gambling company soon, there are other options. Fast Offshore has worked in the iGaming sector for 25 years and has vast experience in Costa Rica, Kahnawake, Curacao, Malta and the Isle of Man. We can assist with all matters, including licensing, company incorporation, compliance, payments and ongoing maintenance. If you want to start an iGaming company but are unsure where to do it, why not contact us to find out more?