Malta’s gaming sector achieves remarkable growth amid mounting money laundering threats

Shirley Pulis Xerxen 2 months ago
Malta’s gaming sector achieves remarkable growth amid mounting money laundering threats

The 2023 National Risk Assessment (NRA) for Malta has recently been released, offering a comprehensive evaluation of the country’s susceptibility to money laundering, terrorist financing, proliferation financing, and targeted financial sanction risks. One of the key sections of the report delves into the Malta gaming sector.

Malta’s gaming sector has demonstrated robust growth, marking a 5.8% increase in value in 2022, contributing significantly to the nation’s economic Gross Value Added (GVA). The Gross Value Added reached €1,495 million, accounting for 9.6% of the country’s economic GVA. The Malta Gaming Authority’s (MGA) interim report for H1 2023 reveals a continued positive trend, with the gaming industry contributing 9.5% to GVA, totaling €810.7 million.

Despite these achievements, the sector faces evolving challenges, particularly in the realm of Money Laundering (ML) threats. The latest findings expose vulnerabilities within both remote and land-based gaming, warranting a closer examination of the industry’s resilience and regulatory frameworks.

Escalating money laundering threats from remote gaming

The remote gaming sector, a pivotal contributor to Malta’s economic landscape, witnessed a surge in Suspicious Transaction Reports (STRs) from 2018 to 2021. The reports revealed a concerning trend involving foreign nationals with limited connections to Malta beyond their gaming accounts, often associated with predicate offences like fraud and tax crimes.

In 2021, debit and credit card fraud linked to remote gaming activity took centre stage, emphasising the challenges in obtaining evidence regarding players’ source of wealth. Noteworthy ML threats in the remote gaming sector include the use of Virtual Financial Assets (VFA), cash transactions, and the involvement of unlicensed entities.

Addressing unique challenges of the land-based sector

Reports from the land-based gaming sector primarily involve Maltese residents, highlighting the sector’s distinct challenges. Threats include the use of cash, licensed institutions controlled by criminals, and activity by unlicensed entities.

The vulnerability assessment rates placement of criminal proceeds through cash and the involvement of licensed institutions controlled by criminals as significant threats. The sector, while facing its own set of challenges, shares common ground with the remote gaming sector, particularly in dealing with unlicensed entities.

Vulnerabilities and threats

A comprehensive analysis has identified vulnerabilities in various facets of Malta’s gaming industry, from payment methods to operator AML/CFT frameworks and the recognition notice framework. Payment methods like bank transfers, credit/debit cards, prepaid cards/vouchers, and cryptocurrencies present unique challenges, requiring robust due diligence.

Operator vulnerabilities stem from issues such as high transaction volumes, outsourcing risks, and insufficient resources for AML/CFT roles. Additionally, the recognition notice framework’s heavy reliance on operators poses challenges in identifying non-compliance.

Mitigating measures and regulatory vigilance

Regulatory bodies in Malta remain vigilant in addressing ML threats, implementing controls during licensing and enforcing AML/CFT compliance programs. A collaborative approach between the Financial Intelligence Analysis Unit (FIAU) and the Malta Gaming Authority (MGA) is instrumental in providing sector-specific guidance.

Despite challenges, Malta’s gaming industry continues to be a vital economic contributor, emphasising the need for sustained efforts to strengthen anti-money laundering measures. The recommendations outlined for both remote and land-based gaming operators underscore the commitment to maintaining a secure and compliant gaming environment.

The NRA was conducted under the coordination of the National Coordinating Committee on Combating Money Laundering and Funding of Terrorism (NCC) and in close collaboration with all governmental authorities engaged in combating financial crime. Additionally, representative bodies from the private sector actively contributed to its development.

Click here to access the full report: Malta NRA Report

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