Malta has been added to the Financial Action Task Force (FATF) gray list of jurisdictions, which could have serious implications for the island's gambling operators.
Although there was no official announcement, The Times of Malta reports that 37 FATF members voted to include Malta on the list on Wednesday.
These members include two regional organizations, the European Commission (EC) and the Gulf Cooperation Council.
It is believed that Malta and Romania have been included in the list and are the first EU territories to be added.
The gray list 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 defined by the FATF.
The FATF regularly updates the list of countries sorted by AML performance.
Currently, North Korea and Iran are the only countries on the blacklist.
The blacklist includes countries where international financial institutions are not encouraged to do business or to use "strong countermeasures" and enhanced due diligence.
It is understood that the decision to greylist Malta will now be submitted to Associate Members of the FATF for ratification.
If ratified, Malta is expected to commit itself to the FATF action plan and enhanced monitoring which, if successfully completed, will result in the removal of the island from the greylist.
Addressing the potential implications of the move, RB Capital founder Julian Buhagiar said it was a "very disturbing" development for the island's gaming and financial industry.
“This is a result that was pretty much self-inflicted and could have been avoided a long time ago,” Buhagiar explained.
“The consequences will be serious,” he added.
“Given that obtaining a license from the Maltese authorities, or even just opening a bank account, was a laborious process, why would anyone go through these difficulties just to obtain a gray list jurisdiction certificate?
“In other words, we must now seriously question the real value that an existing MGA [Malta Gaming Authority] or MFSA [Malta Financial Services Authority] license has for an industry that is increasingly focused on the quality of accreditation.
“With this FATF classification, there is now less incentive for any reputable entity based in Malta to remain associated with such a jurisdiction and will understandably prefer to be certified under a system that has no greylisting implications.
“It is clear that there will be a flurry of re-certification (and, probably, transfer) to more favorable territories. And if most of these companies end up leaving, what about all the honest, hardworking services that depend on the growth of this industry? ' asked Buhagiar.
Earlier this month, there were rumors that Malta could be removed from the list if it agreed to sign the European Union's Macaulin Convention on match-fixing in sports.
It has previously been suggested that being greylisted could affect the long-term ability of operators licensed in Malta to expand into other EU jurisdictions, as mandated by the MGA's operating licence.
Rejecting this suggestion, an MGA spokesman said EGR : “This does not in any way affect the regulatory framework for gambling and therefore whether Malta becomes a party to such a convention or otherwise affects how MGA licensees can use their licenses.
“The position of the MGA on the provision of gambling services from Malta to other jurisdictions will not change. It is also pertinent to note that the Convention cannot and should not prejudice the fundamental principles of EU law, including the freedom to provide services,” the MGA added.
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