The checks and balances applied by the Malta Gaming Authority when it awards remote gaming licences and those applied by the Malta Financial Services Authority when companies are registered in Malta are in need of an urgent update.
The regulatory regime and due diligence processes governing the remote gaming sector are set to be revamped, according to the finance minister, and although the statements he gave on the matter were somewhat vague, the proof of the pudding will, as the adage goes, be in the eating.
In the meantime, the country should also do some serious soul searching and consider taking on board this week’s suggestion from the Green party when it called for the removal of the country’s fiduciary legislation, where mafia bosses apparently found loopholes through which to slip into Malta’s remote gaming sector.
Fiduciary services, as Alternattiva Demokratika rightly said, are services generally provided by offshore countries for tax evasion, and that the corporate veil created by fiduciary services in Malta is unfortunately a stepping stone for an invasion by organised crime. The fiduciary regime must be bolstered or done away with altogether,
Back in 2004, Malta was the first European Union member state to introduce regulations governing the remote gaming sector and since then the industry has not looked back. It has grown from strength to strength and today it is one of if not the fastest growing industries the country has ever seen.
It has become not only a European leader in the sector, it has become a world leader. Dozens of remote gaming companies have set up shop in Malta over the last 11 years, lured here by the clement climate, our fluency in the English language, our communications infrastructure, fiscal incentives and last but not least, the country’s robust regulatory regime.
The serious gaming companies that have set up shop in Malta have done so because their reputation relies on being licensed and regulated by a reputable jurisdiction. What the serious operators, those that Malta wants to attract, require is a strong regulator in a jurisdiction of repute – and not a jurisdiction in which anyone could be given a licence to operate.
But as recent events have evidenced, not every operator to which Malta has opened its doors has been above board, and some very shady characters have slipped through what are inevitably cracks of the country’s due diligence systems.
Recent revelations that Italian Mafia clans have set up an extensive money laundering ring in Malta are shocking and very concerning to say the least.
As the veil is slowly lifted on exactly how the Mafia set up an intricate, multi-layered web of companies in the remote gaming sector, ostensibly aimed at laundering the proceeds of its multi-billion euro criminal network, an ever-darker shadow is being cast on Malta’s corporate structure regime – the use of shell companies to hide and/or launder ill-gotten funds, and using Malta to actually launder those ill-gotten gains.
The full extent of the Mafia’s use of Malta is still unknown. More, much more according to investigations carried out by our newsroom, is still to surface – possibly in the Maltese or Italian media, but definitely once prosecutions begin in the Italian courts.
Of course, almost all those companies were set up in Malta under the laws regulating trusts and fiduciary services, and as far as the Maltese companies offering such services are concerned, all was above board and in line with the law.
If that is truly the case, then there must be something wrong in the law itself.
Throughout the last two weeks, Malta’s regulator, the Malta Gaming Authority, has undoubtedly acted quickly to suspend the licences of the companies listed by the Italian authorities as alleged money laundering operations. It has done what it has had to do, and it has done so quickly – as is expected from a reputable jurisdiction.
It has acted quickly but, on the other hand, we feel that what has been missing is that singular, glaring statement from the government that illegal activity of this sort on the island will not be tolerated under any circumstances.
This is not just a message for the electorate, which is perhaps why the government has not bothered yet; this is a message that needs to be delivered to the international remote gaming industry. That message is that Malta is a reputable jurisdiction that will not allow any illegality whatsoever on its shores.
But despite this, the government and the concerned authorities have been all but silent on this scandal of massive proportions. Yes, the finance minister has said that a review of the legislation will be undertaken, and that the checks and balances enshrined in the due diligence process will be beefed up.
The parliamentary secretary responsible for the remote gaming sector has said that the fact that some ‘isolated’ companies have been involved in criminal activity should not ‘tarnish’ Jurisdiction Malta’s reputation.
It will, however, take more than that for Malta’s reputation to avoid being tarnished.
At the very least, one would have expected the Prime Minister, the economy minister or perhaps the finance minister to have made some kind of hard-hitting statement to the effect that Malta and its various corporate structures will not be used for illegality, and that the country will give no quarter to criminals.
Considering the billions of euros that the remote gaming sector is responsible for and the fact that Malta-based operators account for a fair share of the global trade, it is not unsurprising that organised criminal networks such as the Calabria Mafia would try to infiltrate the country’s remote gaming sector and use it for its own nefarious ends.
It is now Malta’s responsibility to ensure that this never happens again. We have no doubt that the Maltese remote gaming industry will weather this current storm and that more precautions will be set in place once the legislation, rules and regulations governing the sector are revamped further, as it could ill-afford a second battering.