Malta Anti-Money Laundering Advisory Services

New Gaming Licence Fees Regulations In Malta

Money laundering (ML) and funding of terrorism (FT) threaten the integrity of the financial sector and the broader economy, both locally and globally. Unfortunately, these threats are aggravated by the increased means at criminals’ fingertips and the continuous dynamicity of technology.

In itself, money laundering refers to the process of concealing the source of funds obtained from illegal activity within the financial system.  Law and regulations are typically introduced to ensure any money gained through illicit or unethical practices are detected, thus effectively combatting the practice. 
In 2017, the Malta Gaming Authority (MGA) and Financial Intelligence Analysis Unit (FIAU) jointly published a consultation document on the application of anti-money laundering and combatting the funding of terrorism requirements to gaming operators, particularly those who hold a licence to operate games of chance and skill via means of distance communication (licensees). 

The consultation document provides a general explanation of AML/CFT obligations, as well as a general outline of how licensees will be expected to comply with these obligations. 

Anti-Money Laundering - Compliance for Online Gaming Companies

Over the past thirteen years, Malta has seen an advancement in the online gaming sector. The industry has evolved in both size and complexity, inevitably rendering it a potential means for criminals to launder their funds. Upon the enactment of the Malta Gaming Act in 2018, the MGA, sets out certain licence conditions to counter this threat when issuing a remote gaming licence. These conditions go on to include the requirement to appoint a Money Laundering Reporting Officer who cannot hold other positions within the company which may cause conflict with his/her role as MLRO, as well as the implementation of procedures covering Know-Your-Customer, Anti-Money Laundering, Fraud Management and Payout Management. 

Such measures are, in turn, supported by a robust legal framework to combat ML and FT. 

What is the 4th EU AML Directive and how does it affect the Gaming Industry?

The directive prompts the reinforcement of the EU’s existing rules on AML and combatting of FT. 

  1. Enhanced Customer Due Diligence (ECDD) –  
    • The 4th EU AML Directive ("4AMLD") cracks down on the customer due diligence carried out for transactions of €2,000 or more.  This is regardless of whether such transactions were carried out in a single transaction, or in a series of transactions that appear to be linked. The present threshold is presently pegged at €2,330 at the time a player withdraws funds form his account with the gaming operator. The €2,000 limit will go on to apply at an earlier stage, when players wager strakes. While obliged entities are already required to retain CDD (and other records) for a minimum period of 5 years from the termination of a business relationship, the 4AMLD vests Member States with the capacity of extending this period by a further 5 years upon transposing the directive into local legislation. Record retention requirements, moreover, are enhanced to cover areas like results of sanction screening and categorization of customers based on their AML risks. 
  2. Risk Assessment 
    • The 4AMLD now requires obliged entities to carry out a risk assessment that considers risk factors such as countries, customers, geographic areas, services, transactions and delivery channels. This risk assessment shall be documented, kept up-to-date and made available to regulatory bodies. Approved lists will no longer apply to the determination of higher risk jurisdictions. Nowadays, obliged entities must carry out their own risk assessment for non-EU countries. Procedures for risk assessments, and the assessments themselves, must be duly documented. 
  3. Politically Exposed Persons (PEPs)
    • While there are already some rigorous requirements already in place for PEPs, the 4AMLD widens the definition of a PEP to include domestic PEPs in addition to foreign PEPs. PEPs often connote a higher risk of ML instances and, therefore, enhanced CDD measures must be applied. Obliged entities, additionally, must continue to apply these enhanced measures for PEPs for 18 months, even after the individual has vacated his officers. 

Our Gaming Services

The gaming experts within Chetcuti Cauchi use their wealth of experience to provide solutions and advice to clients wishing to set-up gaming operations in Malta or set-up backup operations within any EU jurisdiction. Understanding the complexity of the industry, the team will work hand-in-hand with other experts within the firm, who will offer advice relating to Corporate and Tax, to ensure any issues which may arise will be duly dealt with. 

The firm’s hands-on experience within the Gaming industry has allowed it to offer high-quality services which cover all aspects of iGaming. Our experts have also used this knowledge to provide their two-cents worth on what the future of such technologies can bring about. In fact, numerous thought-provoking articles have been published, outlining what the future can hold when such developments are embraced, rather than restricted. 

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