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Malta’s Financial Intelligence Analysis Unit (FIAU) has imposed an administrative penalty of €236,789 on Malta-based Glitnor Group following significant operational deficiencies.

During a compliance review carried out in 2019, the FIAU found that Glitnor Services – the firm’s B2C division that holds various MGA licences – failed to verify the income sources of a significant number of players.

Risk assessments

Upon reviewing Glitnor’s operations, the FIAU discovered that the company had not conducted the necessary risk assessments related to its activities.

The FIAU pointed out that Glitnor did not provide risk assessment reports when client transfers exceeded a threshold of €2,000.

Glitnor also admitted to neglecting to obtain proof of identity and residence for three clients within a legally mandated 30-day period.

The FIAU noted that although the number of cases was “low and surely not indicative of a systemic issue”, it could not ignore the fact that the company failed to obtain proof of identity and residential address documents within the legal timeframes.

However, the FIAU stated that the company had committed to preventing such failures from recurring and implemented automatic notifications for client deposits or withdrawals amounting to €2,000.

Source of funds

However, the FIAU also found that Glitnor managed eight medium-risk players without obtaining the necessary source of wealth/source of funds information.

Furthermore, the company did not scrutinise seven other players and failed to ensure the legality of the funds they deposited.

In one case, a new client deposited over €3,000 through 38 transactions within nine days, including depositing €800 on two consecutive days.

Despite the potentially suspicious nature of this activity, Glitnor did not monitor the client for the following six months, during which the client deposited €35,000, withdrew €25,000, and incurred a loss of €10,000 over a total period of eight months.

Another client deposited €61,942 over a 13-month period and suffered losses of €12,040. However, Glitnor did not investigate the source of this client’s funds.

Similarly, another client deposited €12,100 using pre-paid cards over three months without withdrawing any winnings, yet the company did not conduct an assessment.

Further, one player from a non-EU country deposited €18,867 over two months using pre-paid cards and an e-wallet. Despite the player’s location and substantial losses of €9,923, no analysis of their income source was performed.

PEP checks

The FIAU pointed out that Glitnor failed to verify if players were politically exposed persons (PEPs) in 80% of cases.

Additionally, although Glitnor claimed to have conducted PEP screening during the compliance examination, it was revealed that they still did not perform PEP screening on five of those players, despite the 30-day timeframe requirement.

The FIAU said Glitnor’s high level of cooperation during the supervisory process was taken into account, along with the company’s commitment to addressing its shortcomings and its indication of already initiating some corrective actions.

However, the FIAU couldn’t help but acknowledge that based on the observed failures until the compliance review, Glitnor had not adequately fulfilled its AML/CFT obligations.

Glitnor plans to appeal

In response to the FIAU decision, the Glitnor Group announced its intention to challenge the decision.

The company stressed that the inspection that led to the penalty took place approximately four years ago, shortly after Glitnor had secured its licence from the MGA and expanded its platform and player base.

Glitnor strongly disagrees with the findings and will exercise its right to appeal.