AML Gaming
Nearly three dozen gaming applications linked to the Iosif Galea leaked information scandal have been halted by the Malta Gaming Authority.

The news of gaming consultant Iosif Galea’s arrest has sent reverberations throughout Malta’s gambling and gaming sector.  

A former compliance officer at the Malta Gaming Authority (MGA), Galea was held in Italy as part of German investigation into tax evasion. But more pertinently, he is wanted in Malta over suspected involvement in a racket that saw commercially sensitive information leaked from within the MGA.  

In February, the Maltese police cybercrime unit started investigating Iosif Galea and Jason Farrugia, a former technical officer for the MGA, over the suspected dealings in confidential information obtained by Farrugia. 

A court heard that in August and September 2021, Galea had wired Farrugia €130,600 over no less than 177 transactions. 

Investigators have now sent out a request to all banks for information about transactions between the two suspects, in order to ascertain whether there have been additional financial dealings between them.

Nearly three dozen applications linked to Iosif Galea have been halted

Sources at the MGA have revealed that no less than 35 applications linked to 24 licensees or prospective applicants with ties to Galea have been halted by the gaming authority. 

Five of these applications were for new operating licences to establish gaming companies in Malta, while the others were for companies looking to offer new services or make changes to their existing set-up. 

All the involved parties have been informed by the MGA that their applications have been scrapped. They must now submit fresh documentation and go through the entire review process all over again

Iosif Galea was already under the spotlight of the regulatory authorities 

Earlier this year, Galea was informed by the MGA that his approval to act as a key function holder with gaming companies would not be renewed when it expired in September 2022. 

As a key function holder Galea was authorised to carry out important corporate tasks related to gaming services and licensees, tasks that can range from running the company, to offering audit, compliance, or legal advice. 

The decision not to renew his approval followed a series of irregularities with gaming companies Galea represented that were flagged by the MGA last year. 

Furthermore, in November 2021, the Malta Financial Services Association (MFSA) issued Galea with a €53,000 fine. While no details of what the fine related to were disclosed, the MFSA stated that he had been offering corporate services that he was not eligible to carry out. 

The Authority then directed Galea to cease providing any services which require prior authorisation or registration from the MFSA. 

The implications for gambling and gaming companies  

A brief statement from the MGA issued on June 1st, 2022, states simply that Galea hadn’t been employed by the Authority since March 2013.  

But the fact that he was still allowed to continue to act as a key function holder with gaming companies until the MGA approval expired in September of this year, coupled with his appeal over the decision by the MFSA, may have led Galea to continue to advise businesses.  

Even after the MGA received multiple complaints from major operators in Malta’s gaming sector, Galea was still describing himself as a “regulatory compliance specialist and iGaming consultant”. 

So, while Iosif Galea was subject to certain action and scrutiny by the authorities which sought to limit his ability to perform in certain functions for businesses, there is no evidence that he had in fact desisted from his activities. 

This may have led to even more companies being put at risk. 

Enhanced due diligence is the watchword 

Perhaps the most important lesson that gambling and gaming companies must draw from this saga, is the importance of conducting ongoing due diligence including automated adverse media screening on all third-party suppliers as well as customers. 

The gaming sector is already under the microscope of countless governmental and independent organisations intent on curtailing its scope and activities. So, it simply cannot afford to become embroiled in scandals involving consultants, or indeed any third parties with which it contracts. 

RiskScreen’s new automated live adverse media functionality is being adopted by an increasing number of gaming businesses to protect them from scandal. For a demonstration of how it could benefit your organisation please contact us. 

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