Maltese financial regulator laments 'useless' AML checks on operators

Malta's Financial Intelligence Analysis Unit (FIAU) reported a 205% increase in suspicious financial transactions in 2020, with gambling and banking listed as the highest AML risk areas.

In 2018, FIAU received a total of 1,668 suspicious transaction reports, and in 2020 this number increased to 5,090.

According to data provided by FIAU, 11.6% of these reports were found to have breaches related to inadequate customer risk assessments, with so-called politically exposed persons accounting for the next largest area of breaches at 7.6%.

In an advisory detailing some examples of investigations into these alerts, FIAU highlighted several instances where remote gambling operators engaged in information gathering practices that "didn't matter" from an anti-money laundering perspective.

These details are intended to collect base level information and do not help in determining the risk of fraud by interested players.

In another cited case, FIAU found a lack of due diligence on the part of an unnamed operator.

“Remote Games Operator has not implemented any enhanced due diligence (EDD) measures despite having players who are residents of high-risk countries and players participating in high-risk games,” FIAU wrote.

“In fact, one of the bettors interviewed participated in low-odds sports betting – a betting method that usually provides higher odds of winning – and wagered significant amounts of money on such games.

“The risk will be that attackers will use these rates to launder the proceeds of crime without risking losing too much of the funds staked.

“The operator has taken no steps to more closely monitor relationships and monitor activities to determine if such activity raises suspicion,” the FIAU added.

In a separate example, another operator with "robust" AML procedures requiring mandatory checks on players depositing €2,000 (£1,728) or more was found to have failed to implement these standards on several occasions.