From ‘perfect storm’ to de-risking cost, gaming supremos share fears about Malta greylisting

What will the effects of Malta’s greylisting by the Financial Action Task Force be?

Pressing on the agenda of Malta’s remote gaming community will be the way increased international scrutiny and enhanced due diligence will affect millions in transactions passing through Malta as well as their already existing issues with correspondent banking.

“I think short term effects will be limited,” says M&A specialist and investor Julian Buhagiar of RB Capital, speaking on the iGamingNext Breakfast podcast hosted by Pierre Lindh. “There have been small island nations that have been put on and off the greylist like Iceland. But even if we are whitelisted in a short period of time, it will take time for confidence to rebuild.”

But he still sees the greylisting effects on Malta and its economy will be felt over a long period of time. “People in Malta are oblivious to what this means, and people do not realise what is coming. The biggest crime is that this could have easily been avoided.”

Malta’s establishment as a base for financial services and remote gaming has brought with it a cosmopolitan boom, which Buhagiar thinks could be undermined by the effects of greylisting: particular among them is the effect this could have on banking services should they become even harder for companies in Malta, which means they will have no choice but to offload workforce to other jurisdictions.

“Relocation will obviously take some time, but if and when that happens, the impact on other sectors will be large,” Buhagiar said, forecasting such effects over a three-year period.

“Malta has done a good job in showing that there are checks and balances in place,” Buhagiar says, but the effort was “too little, too late.”

“Whereas we passed the Moneyval test, which I think was merited, the FATF review is taken over a longer period of time, and I think when they analysed Malta over a longer period of time, they saw a number of red flags which had not been rectified,” he said.

Abby Rachel Pedersen, corporate legal counsel at Safecomly, thinks the FATF greylisting could be the “perfect storm” for companies and employees to move out of Malta. “This is down to three factors: Harsher scrutiny by regulators, more banking issues and the wider use of remote working, which would mean that it would not be worth it for employers to mover their workforce to Malta.”

Aspire Global sustainability Manager Liesbeth Oost said Malta must embrace the criticism “sincerely” if it wants to improve its reputation and credibility. “The greylisting will put an added strain on companies.”

And NOGA managing director Peter-Paul de Goeij said the “unexpected outcome”, given Malta’s support from a majority of FATF plenary members, could be the result of political decisions. “You have member states which are competing for international business, and that can create a backlash among countries who are competing for investments.”

Malta has a tax structure that is attractive to foreign multinationals, but which has caused consternation among member states who rue the delocalisation of their industries and profit-shifting from their tax base.

Investor Mikael Pawlo, founder of Red Flag and now head of growth at Bokio, however claimed the decision spells disaster for Malta.

“While Malta has been successful in promoting itself for companies to move there, especially iGaming companies and to a larger extent hedge funds, financial institutions and banks outside Malta will probably be looking to de-risk,” he said.