Malta and Moneyval: WH Partners speaks to SiGMA Magazine

Malta is seeing several major changes and happenings within the realm of compliance in the gaming industry which have shaken the industry

Jeremy Micallef spoke with Robert Zammit, a Partner at WH Partners, on what this means for the sector and the future of gaming.

The FIAU has been on quite the fining spree as of late, with millions of euros being forked out by a number of companies. What can you tell us about the situation?

Following the Moneyval warning, Malta’s national agency responsible for combatting money laundering and the funding of terrorism, the FIAU, has been in a race against time in addressing the recommendations put forward by Moneyval and has been making genuine efforts to remedy the shortcomings identified in 2019 to avoid being greylisted.

Consequently, the FIAU have increased their resources and as a result, there has been a substantial increase in the number of audits being carried out on all types of subject persons.

Ever since B2C gaming operators became subject persons under the 4^th Money Laundering Directive, it was only a matter of time before audits by the FIAU would start taking place. The FIAU is duty-bound to take enforcement actions against persons who are in contravention with their AML/CFT obligations and it has been actively issuing hefty, unprecedented administrative fines which may not necessarily be proportional to the breaches.

The approach towards AML/CFT obligations of all B2C gaming operators should be a proactive one – this is the legal landscape we are living in and operators cannot afford to be non-compliant. Yes, compliance is costly, but non-compliance is more expensive.

I understand that there are a number of changes that have taken place in this regard. What can you tell us about this?

FIAU’s Implementing Procedures – Remote Gaming Sector, which have recently been revised in order to equal international standards, provide additional insight into what it is expected from B2C gaming operators.

Additionally, the authorities are also interviewing prospective money laundering reporting officers (MLRO) with the aim of ensuring that the persons taking on this role are fully conversant in the respective laws and are equipped with the necessary qualifications to effectively carry out this role. This is something which I haven’t seen in any other jurisdiction and which is surely a step in the right direction.

November is the deadline for the publication of the Moneyval report on Malta. Could there be a connection to the fines? And, where do you see the country going post-publication?

The Moneyval report was definitely a main factor which drove the FIAU to bolster enforcement and supervision measures to show that Malta is taking a proactive approach in minimizing cases of suspicious financial crime. And what better proof is there to show that the FIAU is dealing with enforcement other than issuing administrative penalties?

However, the FIAU should go beyond duty-bound of hefty, non-proportional fines and focus also on educating and guiding the subject persons to operate within the AML/CFT requirements.

The challenges that the Moneyval report has brought within the gaming industry are not solely from a compliance perspective, but also from a banking standpoint. Local banks have reduced their risk appetite because of their increased compliance requirements, and increased their requisites in order to consider accepting an operator in the gaming industry as a client.

A negative outcome of the Moneyval report will definitely put further pressure on the services industry which would make it even harder to bank and operate in Malta.

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