From Crypto Hub to Crime Links: Why Malta’s Gambling Applicant Was Denied a Dutch License

The Hague has upheld the Kansspelautoriteit’s (KSA) decision to refuse a remote gambling license to a Malta-based applicant.

The rejection was based on concerns over the applicant’s integrity, and potential linked to organized crime in the country.

There were three key reasons that the Dutch gambling regulator initially refused the company a license:

• A serious risk of the license being used for criminal activities;
• A reasonable suspicion of criminal offences being committed in the process of obtaining a license
• Doubts surrounding the applicant’s reliability.

The concerns raised by the KSA were primarily linked to a former shareholder of the Maltese applicant. The name is redacted, but the shareholder is implicated in the murder of an investigative journalist in the country who was investigating corruption within the country.

Although further details are not provided, it likely refers to the case surrounding Daphne Caruana Galizia, who was killed by a car bomb in 2017 while investigating systemic corruption and links to the Panama Papers.

The plaintiff claims that it severed all ties with the accused in 2019 following a share transaction. Evidence presented to The Hague, however, suggested otherwise. The KSA alleged the plaintiff failed to fully disclose connections with individuals and corporate entities linked to the person in question.

How Corporate Connections Influenced the License Rejection in the Netherlands

One example provided was that the Maltese trade register revealed that a secretary of the applicant’s company was associated with Tumas Investments P.L.C., a company indirectly linked to the redacted. Malta is well-known for its gambling licensing under the Maltese Gambling Authority. It has also dubbed itself ‘the blockchain island’, welcoming crypto sportsbooks and crypto iGaming operators aplenty over recent years.

The defendant reiterated the argument that all ties were severed five years ago, and that any statements regarding the severance were done in good faith. It also pointed to two positive assessments under the Dutch Public Administration Probity Screening Act (Bibob). The act enables public authorities to request extensive and thorough background checks to assess criminal risks.

Despite Bibob’s assessment of no significant risk in granting the license, the court noted that these assessments did not address the specific reliability criteria outlined in the Games of Chance Act.

The Hague also lamented the plaintiff for providing incomplete or misleading information regarding business relationships with entities connected to the ‘former shareholder.’ Perhaps the most significant point of contention was a series of statements made by the license applicant concerning ties with an online casino indirectly owned by the person in question. Upon being asked for clarity, the plaintiff’s responses were deemed ‘evasive and insufficient’ by both the KSA and the court.

An appeal can be lodged within six weeks with the Administrative Jurisdiction Division of the Council of State.

Gemini’s Move to Malta: Adhering to the Crypto Assets Framework

Malta continues to be an attractive destination for digital currency operators and exchanges. Recently, Gemini announced it is setting up a dedicated hub in Malta. It has chosen Malta as its hub for compliance with the European Union’s Markets in Crypto Assets framework.

According to Gemini, the country’s proactive approach to supporting fintech innovation and the crypto ecosystem presents an ideal environment.