Malta’s Road to Redemption: Turns Screw on Russia, Dirty Money

Following Russia’s invasion of Ukraine–and the retaliatory wave of international economic sanctions against president Putin and his cronies–Malta has double-downed on its money-laundering controls.

Gambling contributes around €700 million (£582.18m/US$763.44m), some 15 per cent of GDP, to the Maltese economy and employs 9,000 of the island nation’s 500,000 people.

The country’s regulatory Malta Gaming Authority (MGA) has now urged the Mediterranean island’s 300 licenced gambling companies to “redouble their oversight” of anti-money laundering controls with “regard to countries facing sanctions.”

And Malta–often called the online gaming capital of the world–has also stopped the sale of so-called “Golden Passports” to citizens of Russia and its ally, Belarus, since the February 24 invasion of Ukraine.

The passport scheme gave wealthy foreigners Maltese citizenship in exchange for an investment of around €1 million (£831,700/US$1.09m), thereby allowing them full access to the European Union.

Hitherto, Russians have accounted for well over a quarter of all those who have bought Maltese passports.

In 2019 The European Commission warned that the “golden” passport schemes—also offered by Bulgaria and the Greek-Cypriot administration of Cyprus–and the “golden” visas on sale in a dozen other EU countries–posed serious money laundering and organised crime risks.

But now Malta seems determined to crush its unwelcome reputation as a nexus for money laundering and dodgy financial transactions.

Major Blow

A home-away-from-home for some of iGaming’s top brands, among them Betsson, Betfair, LeoVegas and Tipico, where an estimated ten per cent of the world’s gaming companies have registered offices, Malta suffered a major blow to its national reputation in 2017 with the car bombing assassination of investigative journalist Daphne Caruana Galiza.

And its fiscal image was further shredded in June last year when, along with Haiti and South Sudan, it was placed on the nominated “grey-list” by FATF, the Financial Action Task Force, the global money laundering and terrorist financing watchdog.

Only a month later, in July, a public inquiry found “the state responsible” for the death of 53-year-old Caruana Galiza — and implicated former Maltese Prime Minister Joseph Muscat and high-level associates in the killing of the anti-corruption crusader.

According to FATF guidance, the grey list is made up of countries that have “defects in their regimes to counter money laundering, terrorist financing, and proliferation financing”; yet who, nevertheless, recognise and have “committed” to resolve these issues swiftly.

Malta remains on the FATF grey list.

Key Reforms

But last month the Paris-based organisation reported that the country “has substantially completed its action plan” and made key reforms: including the increased use of the Financial Intelligence Unit’s (FIU) services to pursue money laundering and criminal tax cases.

Now, Malta only requires an on-site review by FATF officials to rubberstamp findings that anti-money laundering measures are being fully implemented — and thereby re-joining the ranks of certified nations.

Meantime, little Malta continues its big push to choke off dodgy Russian asset washing and financial sanctions busting.

“[We have] suspended, until further notice, the processing of applications for [citizenship] from nationals of the Russian Federation and Belarus,” Malta’s Parliamentary Secretariat for Citizenship and Communities confirmed in a statement this week.

“Due to the Russian war on Ukraine, existent due diligence checks cannot be carried out effectively in the current scenario.”

And the secretariat stressed:

“It is to be noted that following thorough checks, no beneficiaries of any status, related to the grant of citizenship or residence, are on the EU Sanctions List.

“Similarly, no applications from individuals on the EU Sanctions List are currently in process.”

And in a move designed to further underline its break with a murky past, Malta has also suspended the honorary membership of Russian ambassador Andrei Lopukhov from the country’s elite Casino Maltese social club, founded in 1852.

The action, said the club, was prompted by: “The harsh and baseless decision taken by your president, Vladimir Putin, to invade Ukraine, declaring war on a sovereign state in blatant breach of international law, killing innocent people and putting millions of citizens at risk of life and hardship.”