Rich housewives and well-known businessmen: the high-rolling clients of Tumas Gaming

In September 2018 Malta heard how Alfred Degiorgio, among the accused in the murder of Daphne Caruana Galizia, gambled €570,000 over the years, losing €71,000 in the meantime.

Degiorgio was a regular client of the Dragonara Casino, gambling over €39,000 in three years while losing €18,000 of these at the establishment. In addition to this, he gambled €40,000 in the Oracle Casino and over €457,000 at the Portomaso casino establishment. He lost €31,000 and €16,000 at Oracle and Portomaso respectively.

These details were revealed in a money-laundering case against Alfred and his brother George Degiorgio, and the latter’s partner Anca Adelina Pop. They were charged after police began looking into the lifestyle of the two brothers, who despite both claiming to be unemployed, lived a lavish lifestyle owning luxury cars and pleasure boats while having no immovable property under their name.

Whether Alfred Degiorgio’s casino habits had anything to do with money laundering is anyone’s guess, but it’s no secret that casino gambling is the perfect target for anyone looking to launder their dirty cash.

Casinos work with enormous cash flows, and high-rolling clients are a major revenue source – staff are more likely to close a blind eye to suspicious transactions or clients if they provide significant profits to the casino.

Even governments benefit: high profits make for high tax revenues, and by 2019, the gaming industry’s share in economic activity increased by 13.3%, positioning it as the third-largest sector in the economy, excluding public administration.

A publication notice issued on 27 April by FIAU, which will see Tumas Gaming Limited pay a hefty €233,156 administrative penalty, offers a look into the variety of eccentric clients that would visit the casinos operating under the company, in addition to the various breaches of anti-money laundering regulations.

One customer, an EU citizen working as a housewife, was rated low-risk by Tumas Gaming  as they showed a low level of gambling activity, while providing satisfactory identification documentation and having no adverse media reports. Yet this client dropped €41,855 in cash over 10 months, and €37,635 over a 10-day period. If this constitutes low activity level for Tumas Gaming, their higher level clients must be burning through mountains of cash.

Where Enhanced Due Diligence (EDD) was necessitated, Tumas Gaming seemed to have several shortcomings in the shape of a vague EDD form that relied solely on ‘Source of Wealth’ declarations made by players, apart from ID information and customer employment.

According to the FIAU, one player was classified as high risk due to adverse media reports, cash-based gambling, and geographical risk. Tumas Gaming was even in possession of a court judgement against this player, as they failed to declare amounts in excess of €10,000 at Malta International Airport. Throughout the entire business relationship, the player deposited €416,457 at the cash desk and dropped €309,370 on live tables.

Yet these excessive cash deposits and adverse information at hand was not considered by the company, the FIAU said.

The player’s EDD form indicated that he is a marketing consultant, and that his income is derived from professional activities, but according to the FIAU, no additional checks were carried out to corroborate the information. Tumas Gaming remarked to the FIAU that it had a business card confirming the player’s employment, but naturally... this was not enough for the financial watchdog.

Another client, a well-known businessman, dropped €101,200 and lost €90,600 in 20 days during February 2018. This client was known to have owned various businesses and dealt in real estate, and Tumas Gaming was in possession of documentation that verified the sale of properties which in aggregate covered the gambling activity of the client. However, while the player was a regular client of the casinos, having visited in excess of 300 times, it was only last year that the player was asked to complete an EDD form, several years after the start of this business relationship.

The FIAU remarked in its notice that being a well-known businessman “is not a justification for not querying the source of funds, especially given the added risks to which cash intensive relationships exposes the company to”.

Suspicious transaction reports

Offering the benefit of the doubt, none of these clients might have been in the business of money laundering, but the crux of the FIAU report and all AML regulations is that every gambling client should be treated as if they are a potential money launderer, with regular monitoring and constant vigilance.

And land-based casinos are making improvements here. In 2018, 24 suspicious transaction reports (STRs) were filed by casino licensees to the FIAU, whereas in 2020 casinos accounted for 56 STRs.

But remote gaming operators and online gambling institutions still pose risks.

Firstly, Malta’s gaming industry possesses a tainted reputation in part due to revelations that former Malta Gaming Authority boss Heathcliff Farrugia could have provided commercially sensitive information to none other than Tumas magnate Yorgen Fenech concerning rival casino operators. Farrugia has since been charged with trading in influence, while Fenech is currently standing trial for masterminding the murder of Daphne Caruana Galizia.

More recently, an investigation by the Italian anti-mafia police found that RaiseBet24, an unlicensed betting company, acted as a laundromat for a Cosa Nostra clan by funnelling cash to a Malta-based company, thus evading tax. The criminal consortia, connected to the Santapaola-Ercolano mafia clain – believed to have multiple interests in Malta – set up the betting website to conceal links with Italy and organised crime, and through its criminal associates, the clan organised the illegal collection of bets through a network of data centres. A total of €32 million in bets were then charged to a Maltese company, allowing for major tax evasion in Italy.

Where the FIAU is concerned, remote gaming companies show high diligence when submitting STRs. Where in 2018 they submitted 700 reports, in 2020 this shot up to 2,485. This could either be a result of increased training on how to identify and report a suspicious transaction, or it could mean that there are more suspicious transactions being carried out every year.

But these reputation concerns have been somewhat alleviated by Malta’s positive Moneyval report, with the FIAU not shying away from imposing serious penalties on companies breaching anti-money laundering regulations, as is evident with its €233,000 fine towards Tumas Gaming.

But the final hurdle in this is receiving the final stamp of the Financial Action Task Force, where the real risk of grey-listing lies, and the biggest challenge is maintaining this regulatory energy over the years to avoid future Moneyval mishaps.

Clarification: A previous version of this report said that RaiseBet24 was registered with the Malta Gaming Authority. This is not the case.