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Malta’s Financial Intelligence Analysis Unit (FIAU) has imposed a €67,874 administrative penalty on Kanon Gaming, citing deficiencies in the firm’s anti-money laundering measures.

Kanon Gaming offers casino and lottery products and is licensed by multiple regulatory bodies including the Malta Gaming Authority (MGA), the Swedish Gambling Authority (SGA) and the Danish Gambling Authority (DGA).

The FIAU’s compliance review, conducted in 2020, revealed that in 90% of cases reviewed, the company failed in obtaining information regarding the source of wealth and source of funds of its players.

This lack of due diligence allowed players to continue their gambling activities without an adequate risk profile established by the company. 

In one instance, a player from a high-risk country deposited more than €21,000 and withdrew less than €5,000 within a year and two months, yet no information on the player’s income sources was obtained. 

In its representations, the company asserted that the customers “were full-time gamblers.” 

However, the FIAU said Kanon Gaming failed to provide any documentation showing that these customers were indeed full-time gamblers and, thus, the argument was not considered as being justifiable. 

Similar oversights occurred with other players, where significant deposits were made without corresponding information collected on the source of funds. 

Penalty may be appealed

When deciding on the size of the fine, the FIAU said it took the company’s relatively small size into consideration, which reduced the potential impact of these AML failures on “both its operations and on the local jurisdiction.”

The FIAU also added that the company cooperated during the review process.

However, it concluded that Kanon Gaming’s failures represented a systematic breach of its obligation to establish comprehensive customer profiles, hindering its ability to assess the legitimacy of transactions and funds. 

The administrative penalty is not yet final and may be appealed.

NEXT.io has contacted Kanon Gaming for comment. 

Unconstitutional penalties

The ruling comes amid scrutiny of the FIAU’s measures. 

Last year, a Maltese court deemed the administrative penalties imposed by the FIAU unconstitutional, stating that the FIAU did not meet the legal definition of a court. 

Earlier this week, a judge criticised the FIAU’s procedures, describing them as “dictatorial” and in breach of fundamental rights, according to the Times of Malta

The judge highlighted concerns regarding the lack of impartiality within the FIAU’s compliance monitoring committee and urged the state to establish an autonomous and independent body to ensure fairness in legal proceedings.

Several iGaming companies, targeted by enforcement measures from the FIAU in recent months, have appealed the agency’s rulings.

For example, in June 2023, the FIAU levied an administrative penalty of €237k against Glitnor Group, citing substantial operational shortcomings.

Glitnor publicised its intention to initiate an appeal.

Sources familiar with the matter told NEXT.io that several iGaming operators are appealing the FIAU’s decisions on the basis of past rulings that deemed the penalties unconstitutional.  

“We are aware the government and the FIAU are looking into amending the law to create a process that would eliminate this issue. However, this process seems to be taking very long,” one source told NEXT.io

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