Organized Crime and Money Laundering Once Again Threaten Malta’s Fraying Reputation

The small Mediterranean island nation has long profited from its status as one of the world’s leading iGaming hubs but faces constant struggles with crime and corruption. In 2021, Malta was put on FATF’s greylist for systemic regulatory and enforcement failings, but a series of reforms managed to sway the financial watchdog. However, recent news indicates that the country’s woes are far from over.

Illegal Gambling Rings Launder Millions Each Year

A recent investigation connected to the 2017 murder of journalist Daphne Caruana Galizia uncovered an underground lottery ring that ostensibly accounted for an astonishing 30% of the total market share. The government managed to obtain the information thanks to the arrest of local criminal leader Melvin Theuma who shared extensive details about his organization in exchange for a presidential pardon.

Theuma’s input was instrumental in untangling the details behind the illegal lotto operation and its ties to the island’s construction and property markets. These businesses still operate primarily with cash, making them the perfect avenues to launder yearly lottery profits of up to €30 million. Despite the authorities’ efforts, the underground network allegedly maintains its presence across the island.

According to a detailed report by local news outlet MaltaToday, the parallel lotto operates parallel to the official national operator, using the same winning numbers. The underground organization offers tickets and substantial prizes, undercutting the legitimate lottery and using the accumulating gambling debts to undermine local communities.

Such Scandals Threaten Further International Sanctions

The rising controversy again draws attention to the Maltese authorities’ ability to enforce the law and crack down on organized crime. Despite Theuma’s cooperation, the underground lottery is ostensibly still alive and well. Perhaps the matter is not a priority compared to the country’s more pressing problems, but such public failings threaten to undermine what little goodwill the government has left.

2021’s FATF listing created a bureaucratic nightmare for companies dealing with financial services, banking, or gaming. The increased regulatory pressure disproportionately impacted smaller businesses and could have severely impacted the local economy if the government had not acted with alacrity. While updated laws and regulations are promising, the thriving underground lottery proves that enforcement is still sorely lacking.

Despite removing Malta from the greylist, the FATF maintains a watchful eye on the island nation. A return to past behaviors, lack of progress, or new regulatory failings can lead the country back into international trouble. The authorities and the public must work toward improvement across all levels of society to restore Malta’s damaged reputation and capitalize on its unique advantages.