FATF labels Malta an Untrustworthy Jurisdiction

In a surprising turn of events, Malta was added to a dreaded “grey list” of untrustworthy financial countries by Financial Action Task Force (FATF), an international money laundering and terrorist financing watchdog.

The decision by FATF saw the highly respected online gambling jurisdiction added to a rogue’s gallery of disreputable countries which includes the likes of Pakistan, Nicaragua, and Zimbabwe.

What does this mean for the online gambling operators who are licensed by the Malta Gaming Authority, operators who have their businesses set up in Malta and for the future of regulated online gambling in the region?

What Is the “Grey List”?

At first glance having one of the world's most respected iGaming jurisdictions labelled an “untrustworthy jurisdiction” rings a lot of alarm bells. However, digging a little deeper into the intent of the listing and what it means to FATF there may not be any cause for concern yet.

What is colloquially referred to as the grey list is in fact a jurisdiction working with FATF to resolve key financial risk factors:

“Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.”

According to FATF, they are constantly reviewing the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) programs of countries around the world to shore up any weaknesses and secure at-risk regions from abuse by criminal groups.

 The Current State of AML/CFT in Malta

Far from being a punitive state the listing, at least in Malta’s case, seems to be the final step in attaining a well-managed and robust AML/CFT program.

FATF noted the following improvements made by Malta since 2019 to ensure a safer more secure financial risk profile:

• Strengthening their analysis of and risk-based approach to financial intelligence.
• Supervision of Designated Non-Financial Businesses and Professions such as precious metal dealers, real estate agents which can be abused for money laundering.
• Resourcing the police and prosecutors to tackle complex money laundering cases.
• Introducing a national confiscation policy as well as passing a non-conviction based confiscation law.
• Ensuring a robust sanctions policy for those who finance terrorism.
• Empowering the investigation of cross-border cash movements for potential TF activity.
• Defining a clear communication strategy for reporting on targeted financial sanctions.
• Clarifying the risk profile of the NPO sector in relation to potential TF.

FATF applauded Malta for the work done above to secure their borders, allow cross-border cooperation and ensuring that all parties, both locally and abroad, are made aware of potential ML/TF risks.

As the final step in receiving the all-clear from FATF Malta has agreed to address 3 key areas of their regime:

1. Installing appropriate, effective, proportionate, and dissuasive sanctions: These will outline the legal and financial ramifications of any legal persons and gatekeepers who do not provide “accurate and up-to-date beneficial ownership information”.
2. Increase the use of the Financial Intelligence Unit (FIU) and its reporting: This data will be central to tracking and resolving cases of money laundering and other financial crimes.
3. Increase the local FIU analysis capabilities: This will ensure that Maltese law enforcement can effectively investigate and prosecute local ML/TF cases as well as all tax evasion cases.

According to FATF once Malta addresses these final three steps they will be removed from the list of countries under Increased Monitoring and have an approved AML/CFT regime in place.

 MGA Bullish About the Future

In response to the news of Malta’s grey listing by FATF the CEO of the Malta Gaming Authority (MGA), Carl Brincat, was in good spirits choosing to focus on the good work already done by the government, saying:

“We are fully committed to undertaking the necessary reforms soonest, and in fact it is already being implemented.”

He went on to note that the temporary adjustment to the country’s status will not have any real or lasting impact on the iGaming industry within Malta nor any of the businesses located there.

Should any companies face challenges or questions from suppliers and other jurisdictions in the interim Brincat committed the “full support” of the MGA to assist them in resolving the queries that may arise.

It is also worth noting that the MGA as an institution was not criticised by FATF at all during their review of Malta, rather it received praise for its processes and strategies.