Malta’s igaming money laundering risk decreases in latest government report
National Risk Assessment finds the industry has improved measures to combat money laundering but does air concerns around spikes in suspicious transaction reports
Malta’s igaming industry has seen its money laundering risk reduce to ‘medium’ from a previous 2018 ranking of ‘high’ in the country’s National Risk Assessment (NRA) report.
Malta released its 2023 NRA this week, with the investigation being conducted by the National Coordinating Committee on Combating Money Laundering and Funding of Terrorism (NCC) alongside government authorities.
In 2018, when Malta last carried out an NRA assessment, which led to the mutual evaluation report being published a year later, showed “several shortcomings” in anti-money laundering (AML) practices on the island.
Comparing the 2018 findings to 2023’s, online gaming’s residual risk decreased from ‘high’ to ‘medium’ as the NRA pointed to the strong effectiveness of mitigating measures as a core reason.
The risk assessment for money laundering in online gaming found the inherent risk was ‘medium-high’.
However, the residual risk was reduced to ‘medium’ as the report found the sector’s effectiveness of mitigating measure was ‘high’.
Assessing the level of money laundering risks, igaming fell under the ‘significant’ category due to the “high number of customers” and “high volume transactions” as well as the use of pre-paid cards and business being done online.
It was also noted that it was very unlikely online gaming would be used for the raising or movement of funds to finance terrorism.
However, the NRA did reveal a severe impact for licenced firms being controlled by criminals and their associates through complex structures.
In fact, the report highlighted that suspicious transaction reports (STRs) involving online gaming spiked between 2018 and 2021.
These reports included references to fraud and tax crimes while the report also noted an inability to secure sufficient evidence relating to players’ source of funds.
Other concerns raised include Malta-based companies operating under “less robust AML framework[s]” when engaged in non-Malta Gaming Authority (MGA) licensed activities.
The report detailed that exposure to high-risk jurisdictions for Malta-based companies was limited to 5.4%.
Elsewhere, data derived from the Financial Intelligence Analysis Unit showed that 82.6% of remote gaming operators reported that high-risk players represented between 0% and 25% of its total customer base.
The assessment also laid out recommendations including regularly reviewing the risk assessment and management processes and to “continue maintaining risk-based customer due diligence policies, procedures and processes”.
Other recommendations included putting enhanced identification and verification measures in place and maintain an ongoing employee training programme.