Due Diligence is not just a tick in the Box! by Kevin Abela

In the past couple of months the igaming industry has been tainted by the so called Calabrian ‘Ndrangheta’. Malta is home to over 350 igaming companies due to the favourable tax position offered by the Maltese government and is understandable that a number of these companies are based in Malta.

A major police investigation led to six Maltese licensed companies’ assets being seized as part of this investigation as confirmed by the Times of Malta. The Malta Gaming Authority took immediate action by suspending these companies gaming licenses. Numerous arrests have been made in Malta and also in Italy. Will this hinder the decision making for prospective business or individuals from opening their operation in Malta and applying for an igaming license? The answer would be most definitely NO. If you are a legitimate organization and have no relation with any organized crime then you would have no issues and would pass all the due diligence work done by the Malta Gaming Authority with flying colours! I would therefore think twice if you have any skeletons in your closet!

This opened a huge tank of worms! The Malta Gaming Authority where questioned extensively as to why this occurred and allowed to happen under their watch when these companies are supposed to have extensive due diligence work processed on them prior to issuing a license to them. The head of the Malta Gaming Authority Mr. Joseph Cuschieri spoke to the Times of Malta and confirmed that all necessary due diligence work is carried out prior to him signing off the approved license. Yet a particular igaming organization was allowed to commence operations and a back dated license was granted to them. What does this mean? The answer was that he would look into this matter personally as he deals with numerous licensing requests regularly. Can one blame human error? This is up to anyone’s interpretation.

In due course a number of other igaming operators have had their license suspended due to suspected involvement with the Calabrian ‘Ndrangheta’ and more arrests have been made. Unfortunately some of these companies with suspended licenses provided services to other igaming operators who actually run a legitimate business. This has therefore affected their business as they had to suspend all links with these other companies. Unless these companies get cleared and get back their license the other operators will have to commence their search for another service provider hoping to find suitable replacement and as quickly as possible. Casino operators solely depend on these service providers and therefore have led to loss of revenue and could lead to other major problems.

The Malta Gaming Authority through credit checking companies does a very in depth and extensive due diligence exercise on all registered igaming companies with a license to operate in Malta. This due diligence process is an ongoing process and is done regularly. These credit checks also go through an overseas company that also provides all the necessary information for due diligence checking which goes to show how extensive the credit checks are.

It is very important that prospective license applicants do their own due diligence as well as it is in their own interest to know who they are dealing with. Applicants need to understand the importance of doing their own credit checks. Credit checking companies are available to all and can be utilized whenever needed. You cannot standby and hope you are dealing with the correct individuals / businesses. The igaming industries get involved with numerous affiliate companies and credit checks on these affiliate companies must be done by the applicant. Why risk being involved in money laundering activity if all it takes is a simple credit check on these affiliate companies.

The Malta Gaming Authority is simply going through all licensed igaming operators in Malta to guarantee they are all legitimate. The detail gained from these reports will help the Malta Gaming Authority to further enforce their grip on these operators and to identify any relationships they might find to the current igaming operators with suspended licenses. This is not a simple tick in a box and license approved. An extensive check is done by the Authority and numerous credit checks are done on these applicants prior to approval of license.

In conclusion the next time you decide to apply for an igaming license in Malta make sure you are dealing with the correct people and that you do your own due diligence first. This will save you time and money in the future knowing you are dealing with legitimate businesses or individuals.

Kevin Abela, Financial Controller, Creditinfo Malta Ltd.
Click here for Kevin’s Bio and contact info

Further reading: http://www.timesofmalta.com/articles/view/20150726/local/mafia-links-to-malta-not-yet-fully-exposed.578150