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GAMINGmalta 2019 EDITION
Heathcliff Farrugia, CEO of the Malta Gaming Authority
Navigating Change
The Regulator
Heathcliff Farrugia, the new CEO of the Malta Gaming Authority (MGA), shares his thoughts on Malta’s brand-new Gaming Act, the MGA’s test environment for blockchain and cryptocurrencies, as well as the need for greater international cooperation on crime prevention and gambling addiction. As the new CEO of the MGA, what are your priorities for the coming years?
2018 was a milestone year for the MGA, with the introduction of the new Gaming Act in August. From a supervisory perspective, our priority is now to ensure that licensees implement their new obligations and comply with the new requirements, especially those relating to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) activities. I think it is becoming increasingly important to make sure that regulators are properly equipped to conduct their work and are able to enforce regulations. The new Gaming Act has increased our regulatory powers, placing a stronger emphasis on the compliance and enforcement function, while allowing us to further raise the bar in player protection. Over the past five years the MGA has done a lot of great work, and I definitely want to keep building on our past achievements. While we are one of the largest iGaming jurisdictions in the world, we don’t consider the size of the sector as a measure of success. We look at our effectiveness in ensuring that players are protected and that the sector is kept free from crime. At the same time, we are focused on the future, and we want to ensure that innovation does not dry up – both from a regulatory perspective but also within the industry itself. Technology advancements related to blockchain technologies and cryptocurrencies have promising potential, and it is certainly one of our priorities to position the MGA on the forefront of regulatory innovation in this space.
How would you describe the transition to the new Gaming Act?
It was quite a smooth transition, especially with regard to the streamlining of the licensing structure from a multi-licence system to a two-licence system: a business-to-business licence and a business-to-consumer licence. These two licences now cover different types of activities across multiple distribution
channels. Previously, we managed over 600 licences; we now have close to 300 licences with the same number of operators. Some operators returned up to 18 licences and received one or a maximum of two in return. At the same time, the decision to move towards a risk-based approach to regulation has helped us become more efficient and effective in our supervisory function. We are now rating operators in different risk categories, which are subject to different levels of compliance checks. This allows us to allocate resources where they are needed and respond better to problems as they arise. We believe that a one-sizefits-all approach to regulating the industry doesn’t make sense any longer. The sector has evolved quite a bit since Malta’s first gaming law was introduced in the early 2000s. The overhaul was much needed. Overall, I would say we had very few teething problems because the transition was very well planned. However, while 1st August 2018 was the day the Gaming Act came into force, it doesn’t mean that the work stopped there. Operators still require support and technical guidance, and we are currently working to make sure there is more clarity about the new rules and regulations.
What other changes did the new framework bring about for operators?
Beyond the changes in the licensing structure, a key change was the phasing out of the key official role. Licensees are now required to identify the persons responsible for the key functions within their companies. Such persons are, in turn, required to undergo the MGA’s scrutiny in order for us to assess their fitness and propriety. We are now looking at a number of individuals such as the CEO, CFO, CTO, CMO, legal and compliance officer, and of course, the Money Laundering Reporting Officer. Other important changes relate to new obligations that have arisen under the Fourth Anti-Money Laundering Directive given that in 2018 iGaming companies became subject persons.