Following the arrest by the Italian authorities of the so-called ‘betting king’ Benedetto Bacchi, suspected of using Malta-based gambling companies to launder money made by the Mafia from drug trafficking, extortion and other illicit activities, Partit Demokratiku MP Godfrey Farrugia said the monitoring processes in place are not stringent enough.

In comments to The Shift News, Farrugia said that despite government’s claims of having introduced stricter regulations companies with links to organised crime in Italy were allowed to operate and their licences were only revoked after a number of arrests and raids by Italian police.

“If the measures adopted are indeed more stringent why did they fail, with two licences cancelled in 2016. It seems to me that they are not stringent enough.”

Maltese authorities are increasingly concerned about the damage to its already faltering reputation overseas. Bacchi’s arrest was not the first of its kind and in recent years three police investigations in Italy led to the shuttering of Italian gaming companies registered in Malta.

This has led the Malta Gaming Authority (MGA) to launch an investigation of all Italian companies licensed in Malta to root out links between Malta and organised crime in Italy.

Farrugia tabled a number of Parliamentary questions in which he asked Prime Minister Joseph Muscat to detail what steps have been taken to strengthen the monitoring and due diligence processes. The MP also asked why the Malta Gaming Authority (MGA) only suspended the remote gaming license of Bacchi’s company Phoenix International Ltd after the arrest of 23 people.

“What failed? What are the current monitoring policies? Have these changed since the arrests? If yes, how?” Farrugia asked in Parliament.

In his reply, Muscat said that in 2015, 23 licences were suspended and 13 cancelled while in 2016, two licences were suspended and 21 companies had their licence cancelled. In the first six months of 2017, four licences were suspended and only one cancelled.

Muscat added that the MGA continuously updates its monitoring and supervisory procedures “to keep up with regulatory and technological developments in such a dynamic industry.”

The authority, Muscat added, strengthened its due diligence department by investing in more human and technical resources.

Muscat said the due diligence process has changed and MGA is collaborating with foreign intelligence agencies, adding that the authority was also conducting in-depth investigations on applicants’ source of wealth.

Moreover, MGA continuously monitors operators by carrying out independent audits and anti-money laundering inspections, Muscat said.

In a separate Parliamentary question, Farrugia asked why a former MGA employee has been denied whistleblower status over a number of irregularities and lack of enforcement by the regulator.

The man who was employed as an IT administrator, Muscat replied, was sacked after disciplinary action was taken against him over “incompetence and insubordination.” He added that court will decide whether the man should be granted whistleblower status.
In his reply, Muscat also noted that the alleged irregularities were investigated by the authority’s internal independent auditor but these allegations were “unfounded.”

In reaction, Farrugia told The Shift News that “there should have been an external independent investigation and not an internal one.”

Farrugia also said that although the EU’s Fourth Anti-Money Laundering Directive (4AMLD) came into force on 26 June 2017, a public consultation process by the MGA and Financial Intelligence Analysis Unit (FIAU) was only launched in July 2017 and relaunched again in February 2018.

“Why was the consultation issued in July 2017 and once again, as revised and duly taking into account comments received, in February 2018, a whole eight months after it should have been enforced on remote gaming,” Farrugia asked, adding that the gaming industry poses a risk t to the Maltese financial system.

In Parliament, Farrugia also asked whether the Risk Assessments (NRA) carried out by the MGA will be published, but Muscat said the authority will only publish sanctions and fines imposed on companies.