Malta, the Mafia’s ‘El Dorado’: report finds billions laundered through Malta

A study commissioned and published by the European Parliament’s co-chair of The Left in the European Parliament (GUE/NGL), Martin Schirdewan, on Monday shows Italian mafia clans laundered billions of euros of ill-gotten, illicit funds through online gaming platforms in Malta between 2015 and 2022.

“This is a massive amount of blood money that ‘Ndrangheta, Camorra and Co are trying to cover up through online gaming and funnel back into the legitimate economy,” Schirdewan said.

The German journalist and MEP made specific note of how, as early as 2015, assassinated Maltese journalist Daphne Caruana Galizia described online gaming as the “ideal solution” for laundering massive amounts of income Italian mafia clans have made from their global cocaine trade.

“Caruana Galizia was way ahead of the European Union legislators, who, to date, have not kept pace with the development of international money laundering,” he said.

The study’s authors were Michael Findeisen and Sandro Mattioli of ‘Mafianeindanke!’ [Mafia? No thanks!], a German anti-mafia movement created in the wake of the August 2007 Duisburg killings.

From the €6.7 billion in total assets that were confiscated across some 100 investigations examined by the study, €4 billion alone came from investigations into online gaming related to Malta.

The study published on Monday finds that “in practice, there are few better tools than online casinos to obfuscate and launder illegally-generated money.

“Criminals, including those from Calabria’s ‘Ndrangheta and Sicily’s Cosa Nostra, have become part of the Maltese gaming sector through the companies they have set up, through which they have been able to launder huge sums of money.”

From Malta, several platforms with a variety of betting sites were either attacked by criminal organisations or were connected to them, and the study found that mafia clans also managed to use established companies for their purposes.

“It was above all the journalist Daphne Caruana Galizia, who was murdered in 2017, who repeatedly pointed out their involvement and reported on money laundering risks, mafia activities and conflicts of interest as well as suspected corruption among politicians.”

In addition, due to its geographical proximity and easy accessibility, Malta has always been an alternative location for Italian Mafiosi, the report noted.

Among several examples, the study noted how the Cosa Nostra boss of bosses, Toto Riina, stayed regularly and for extended lengths of time in Malta where he owned an apartment and was even hospitalised under his real name while being Interpol’s most wanted criminal.

But it was mainly the advent of online gaming that firmly pinned Malta as a dot on the map of many mafia clans.

“It is noteworthy that almost all of the countless investigations into online gaming related to money laundering showed that the operative centre was in Malta.

“The lax controls, the lack of interest in investigating and the close political ties in the country are the reasons why Malta became the mafia’s El Dorado.”

Tip of the iceberg

Commenting on the research, Schirdewan warned, “The study only shows the tip of the iceberg and merely gives an idea of the worrying extent of cross-border money laundering risks in European online gaming.”

He made an appeal for European politicians to “wake up” and create EU-wide, specific transparency rules to combat money laundering in online gaming.

“The Union has slept through this so far. Therefore, in the current renegotiation of European money laundering legislation, I am fighting for effective transparency rules that enable us to keep track of the mafia clans.”

The European Parliament is currently discussing an amendment to the EU anti-money laundering regulations.

The European Commission presented the draft law in the summer of 2021, and at the beginning of next year, the EP will need to agree on its negotiating position with the EU Council of Ministers.

The extensive study cites Forbes magazine, which says around 10% of the world’s online gaming companies operate based on concessions from the Malta Gaming Authority and that Malta makes some €1.4 billion a year from such operations.

But it says that compared to other EU countries, the Maltese financial services industry has “atypical” structures unrelated to the real local economy – payment processing structures for overseas online players.

It finds that based on its number of inhabitants – 514,000 as of June 2021 – Malta, with its 18 licensed e-money institutions (and 24 payment institutions), has an incredible 300 times more e-money institutions than Germany.

The Malta-licensed institutions manage 496,700 e-money accounts, according to European Central Bank statistics.

“These structures in Malta’s financial services industry are worrying,” the study concluded.

It added that, from the point of view of Germany’s Federal Financial Supervisory Authority (BaFin), Malta is a financial centre that “favours non-transparent transactions and presents a cross-border threat that allows criminals to conceal transactions”.

While, in theory, the gaming industry is ‘strictly controlled’, the study dismissed this as the Malta Gaming Authority’s “self-description”, adding this was far from reality.

The MGA, it said, should, among other things, prevent criminal companies from infiltrating the gaming industry, monitor licence holders’ business activities and ensure the regularity of gaming operations.

The annual reports of the Italian National Antimafia Public Prosecutor’s Office (DNA) and the Italian investigative authority Direzione Investigativa Antimafia (DIA) also demonstrate the rapidly growing importance of Malta for criminal activities from an Italian perspective.

According to the report, “The confusion of data and the poor information available on the role of the online gaming market in cross-border money laundering in the EU, especially in Germany, is frightening.”

Correction: The original title stated that €4 billion was laundered through Malta. The total amount of money laundering could be less or more than the value of confiscated assets.