Malta greylisted by Financial Action Task Force over AML concerns

Malta has been added to the Financial Action Task Force’s (FATF) greylist of jurisdictions in a move which could have potentially serious ramifications for the island’s igaming operators.

Although no official announcement has been made, The Times of Malta reports that 37 members of the FATF voted to include Malta on the list on Wednesday.

Those members include two regional organisations in the European Commission (EC) and the Gulf Cooperation Council.

Malta and Romania are both understood to have been included on the list and are the first EU territories to be added.

The greylist includes 19 other jurisdictions, including Albania, Syria, Yemen, Myanmar and Zimbabwe.

International tax havens Panama and the Cayman Islands also feature on the list, which highlights countries with “weak” anti-money laundering (AML) measures, as identified by the FATF.

The FATF regularly updates its list of countries, which are sorted by their AML effectiveness.

North Korea and Iran are the only blacklisted nations at present.

The blacklist includes countries where international financial organisations are not encouraged to do business, or to employ “strict countermeasures” and enhanced scrutiny when doing so.

It is understood the decision to greylist Malta will now be passed to FATF associate members for ratification.

If ratified, Malta will be expected to commit to an FATF action plan and enhanced monitoring, that if completed successfully will see the island removed from the greylist.

Addressing the potential impact of the move, RB Capital founder Julian Buhagiar said it was a “very concerning” development for the island’s gaming and financial industries.

“It is an outcome that was largely self-inflicted and could have been avoided a long time ago,” Buhagiar explained.

“The repercussions will be profound,” he added.

“Given that it was already a time-consuming process to get a licence from a Maltese authority, or even simply just to open a bank account, why would somebody go through this onboarding hassle only to be certified by a greylisted jurisdiction?

“Put another way, we now have to seriously question the real value that an existing MGA [Malta Gaming Authority] licence or MFSA [Malta Financial Services Authority] certification has in an industry that is placing ever more scrutiny on the quality of accreditation.

“With this FATF classification, any respectable entities based in Malta now have less of an incentive to remain associated with such a jurisdiction and will understandably prefer to be certified by a system that has no greylisting implications.

“There will understandably be a flurry of recertification (and likely reshoring) activity to more favourable territories. And if most of these companies do end up leaving, what of all the honest, hard-working services that depend on the growth of this industry?” Buhagiar asked.

Speculation had been rife earlier this month that Malta could be removed from the list if it agreed to sign up to the European Union’s Macolin Convention on match-fixing in sport.

It has previously been suggested that being greylisted could affect the long-term ability of Malta-licensed operators to expand their operations into other jurisdictions in the EU, as covered by an MGA operating licence.

Dismissing this speculation, a spokesperson for the MGA told EGR: “ It does not in any way affect the regulatory framework for gambling, and therefore whether or not Malta becomes a party to such Convention or otherwise has no bearing on how MGA licensees may make use of their licence.

“The MGA’s position on the supply of gambling services from Malta to other jurisdictions will not change. It is also pertinent to point out that the Convention cannot and must not prejudice overriding principles of EU law, including the freedom to provide services,” the MGA added.