Malta’s Financial Intelligence Action Unit (FIAU), a government agency responsible for combatting money laundering and terrorist financing, fined Casino Malta for a lack of due diligence and inadequate risk assessment procedures.
Referring to one case, the FIAU said that a CEO of a company – who had connections to Turkey – was able to spend €1m with Casino Malta, without the operator checking the customer’s source of funds.
Most of this was in cash, and was summoned from eight different bank accounts.
The customer had notes attached to his player profile, which required his identification documentation to be collected on his next visit to the casino. However, no notes were entered that referred to collecting source of funds information or documentation.
“The company should have carried out additional measures such as obtaining documentation as to this player’s source of wealth (SOW) as well as the income earned, and other returns generated through his employment/businesses,” read the FIAU’s report.
In another incident, a student with connections to China was able to spend €200,000 – and lose €80,000 – from January 2019 to December 2019 without any source of funds checks.
On reviewing the case, the FIAU remarked that “it was not provided with any reassurance as to how a student could afford such substantial gaming activity/deposit in a relatively short period of time”.
More broadly, the FIAU committee highlighted systematic issues with the casino’s internal risk classification methodology. It noted that of the player profiles reviewed, 22% of those who were allocated a low or medium risk rating made transactions that such a player would not normally be expected to carry out.
“The committee pointed out that this customer activity should have triggered the company not only to carry out an update of the risk rating, but independently of the rating to carry out the necessary enhanced measures to manage the risks of such activity.”
For example, a player with a legitimate bank account was often classified as low or medium risk, despite the nature of their betting.
One customer spent €2m, losing €900,000 between 2016 and 2019. While the FIAU said that ensuring funds are coming from a legitimate bank account is important, it is not sufficient to completely mitigate the individual’s risks “since this measure does not identify nor evidence the source of funds but simply outlines the flow of funds”.
Failure to report
Throughout the report, the FIAU made specific reference issues with the casino’s internal procedures. The committee argued that the casino’s guidelines did not provide employees with sufficient instruction of what course of action they should take when reporting suspected cases of money laundering.
In one case, one person who listed their profession as a “plasterer” was able to gamble significant amounts of money in the casino, despite being engaged in court proceedings for drug trafficking, with a freezing order put in place.
“The company, although unaware of the freezing order, knew of the ongoing court proceedings against the customer,” said the FIAU. “Notwithstanding this, the company never submitted a suspicious transaction report (STR) to the FIAU in relation to this and continued to allow the player to wager substantial amounts.”
In another case, a former politically exposed person (PEP) registered with the casino and was categorised as low-risk despite their status. Once the company conducted checks on the player, the individual was found to have allegedly been involved with bribery and tax evasion.
“Notwithstanding this discovery, the customer was still allowed to continue wagering great amounts in cash. Despite all of this, the company failed to submit an STR to the FIAU.”