The gaming industry is never too far away from controversy. Many consider gambling addiction to be as much of a problem as drug addiction or alcoholism. The rise in popularity of online gambling has brought the industry once again on top of the agenda of regulators. But this time it is not just about the ethical issue of online gambling and addiction but also about the relationship of online gaming with organised crime.

The government, perhaps belatedly, realised that granting licences to online gambling companies does not come without significant economic risks. The online gaming industry in Malta today accounts for 12 per cent of GDP. It creates thousands of jobs, pays millions of euros in taxes and provides additional recreational activities for both locals and tourists.

The Parliamentary Secretary for Financial Services, the Digital Economy and Innovation, Silvio Schembri announced that the government would be ‘repositioning’ the gaming sector by enacting a single law for the industry. Many argue this is the typical reaction of regulators and policymakers acting too late to stem in the bud suspected abuse by certain operators in a particular sector.

The US does not tolerate online gambling websites because the industry is notorious for facilitating illegal transactions. Some EU government take the same stance. Back in 2016, US banks had severed correspondent relationships with some Maltese banks including a major one because they did not want the risk of the clearing system being used to launder illegal transactions. The Prime Minister had gone to New York to resolve this issue but not much was revealed about the outcome of his efforts.

Today, major international banks and credit card companies rely on massive databases that can detect transactions by illegal set-ups that try to launder money in foreign jurisdictions. It is widely known among online gaming experts that criminal gangs in Italy and other countries may be using jurisdictions like Malta to launder large volumes of e-gaming transactions usually made up of small individual amounts to clean illegal gains made through crime committed in Italy and elsewhere.

Maltese banks are aware of this danger and the even more significant risk of breaking relationships with major US clearers as a result of local e-gaming companies using the domestic banking system to clear funds originating form suspicious transactions. The government should have acted on this issue much earlier because the perception that Malta often ignores anti-money laundering directives is harming the image of the country. The involvement of five locally-registered e-gaming companies in alleged crime in Italy has been extensively reported in the Italian media and that cannot have made Malta any good.

The enactment of new legislation is, of course, a welcome move but Malta must convince international anti-money laundering institutions it is not just enacting smart laws but also has the political will to implement them. Malta has for too long now been associated with the perceived lack of political will to do what is right to ensure that the rule of law prevails at all times.

E-gaming is an industry worth preserving even if, like the tobacco and alcohol industry, its ethical justification is not persuasive. Malta must do all in its power to ensure local e-gaming companies do not launder funds generated from organised crime.

This is a Times of Malta print editorial


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