Payment Expert: Malta at crossroads to solve its greylisting conundrums

The decision by the Financial Action Task Force (FATF) to place Malta on a greylist of financially untrustworthy countries has had a major impact on the reputation of companies based there, according to a panel speaking at a recent SBC Webinary.

Sharing their views with Joe Streeter, Editor of Payment Expert, Enrico Bradamente, CEO, at Maverick SlotsJames Scicluna, Co-Managing Partner at WH Partners; and Yanica Sant of the General Counsel, Malta Gaming Authority (MGA), explained why this was the case and what impacts this was having on the Maltese finance and gaming sectors.

For Sant, the impacts of the FATF greylisting on Malta’s financial sector and standing were ‘not unexpected’, whilst the MGA General Counsel member added that the international body’s three major points of concern were ‘very extraneous to the gaming industry’.

“What that means is that the manner in which the gaming industry is regulated and the law and the compliance is not being questioned, and is not being placed under any scrutiny,” she explained.

“However there are direct effects and we expected there to be repercussions to businesses like the gaming industry, and it is not unexpected. We understand the inconvenience and the worry that comes with such a direct effect, and that is why every institution in Malta – and we are one of them – have a plan that is being set in motion in order to get out of this greylist.

Despite the immediate effects of the greylisting being unexpected for Sant, she added that the reputational issue of the decision has been great, ntoing that for the MGA and other Maltese institutions, reinstating this reputation is a key priority.

She continued: “We need to remember that what the greylist actually is that the jurisdiction is being placed under increased monitoring, and that makes it a reputational issue because there is no word worse than ‘greylist’.

“What we need to do is address reputation, specifically because there are no points relating to the matter in which the gaming industry is regulated in Malta. Our plan is to work on our reputation and ease the problems.”

Bradamante, meanwhile, saw the impact of the FATF greylisting on Malta’s reputation was second only to the enhanced due diligence checks implemented against firms and individuals registered on the island by financial institutions, which has significantly slowed cash flows.

“A process of enhanced due diligence is taking place, specifically for banks and financial institutions that are outside of Malta,” he noted. “Those that are inside of Malta, we have not seen that yet, we do not expect that anything that is within the jurisdiction will change. This is the biggest impact, the other big one that we have seen is the reputational effect.

“Whilst the greylisting is a very technical matter, the three items that Malta failed on are very specific and quite technical – whilst the common man in the street in Malta or outside would not know the details of the greylisting process, they have seen the headlines, which is creating negative effect by association.

This, he explained, has had a major effect on recruitment and business negotiations, as Malta and companies based on the island are now viewed as less financially trustworthy han before.

Agreeing with the Maverick Games CEO was Scicluna, who highlighted the impact of due diligence checks, which he explained had significantly changed the dynamic between financial institutions and customers who have ‘any connection to Malta’.

“It comes with a high compliance cost, and cuts across the board – it is not just related to gambling,” he said. “WIth the greylisting it has become worse because in the sense that those financial institutions which have not yet put Malta on their high risk list are doing so as we speak.

He also observed that the greylisting could affect the pre-existing relationships between international financial institutions and companies registered in Malta.

Scicluna continued: “I think a very important measure of how bad it might get is whether or not amongst these financial institutions there are one or more, or many, that might consider that it is not worth maintaining these relationships with persons who have a Maltese connection.”

He did, however, acknowledge that this trend has not yet occurred – to his knowledge – to any Maltese gambling incumbents, adding that any predictions concerning the termination of relationships between financial institutions and operators were ‘purely speculative’.

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