The perceived effects and implications of a de-risking strategy within Malta’s gaming industry

Abstract

In this research, the researcher examines the perceived effects and implications of the evolving de-risking occurrence by classifying and explaining the crucial drivers that impact or are influenced by the de-risking process. This research’s primary focus is the perceived implications and critical drivers of the de-risking concept, focusing more on the gaming entities in Malta. Throughout this dissertation, a mixed method approach was adopted to obtain the main goals of this study and answer the research questions. The data was collected through surveys that targeted professionals working with financial institutions, corporate service providers, gaming entities authorities and professional services. This information was analysed using qualitative and quantitative tools. During the past year, Malta’s de-risking concept across various sectors to minimise risks resulted in rising compliance costs, higher penalties and fines. The EU, especially the MoneyVal report, has pushed sectors across Malta to be more compliant and apply measures to mitigate gaps in the regulations that were in place locally. This study focuses on how financial institutions adopted a de-risks strategy that financial institutions used affected gaming entities. It seems that de-risking leads to certain types of customers, such as gaming entities, being financially excluded, resulting in terminated banking relationships. By utilising this risk appetite, various organisations have managed to handle risks more adequately, such as repetitional risks and having a sustainable consumer establishment. The de-risking concept increases ubiquity, and the adoption of this concept needs to be continued in future years, both locally and internationally. Regulatory authorities, such as the MGA, FIAU and MFSA, are responsible for regulating and providing oversight whilst ensuring that the de-risking strategy is being adopted in a meaningful manner, thereby ensuring that legitimate business is not lost. This will ultimately result in the maximisation of the effectiveness of the de-risking strategy by striking the right balance between the adequate management of risks and not destroying the needs of the business, whilst implying the need for regulation to be balanced and proportionate. Since there has been little research on the de-risking strategy that had to be adopted after the MoneyVal report in 2019, this research has mainly focused on the gaming industry in Malta as a vital contributor locally. This is because this study will analyse whether the perceptions regarding the effects and implications of a de-risking strategy in the gaming industry in Malta are aligned between the industry and the regulators themselves. Furthermore, this research strengthens the need for the continuous awareness and campaigns required to enhance the knowledge and expertise of de-risking locally. Educating professionals is necessary to remain up-to-date with all the newest improvements concerning de-risking and AML/CFT.