In December, the EC updated its rules regarding high-risk third countries. The nations included in the ignoble list face systemic anti-money laundering (AML) or countering the financing of terrorism (CFT) failings. The recent inclusion of Gibraltar deserves special mention, as the territory is one of the largest online gambling hubs. Tightening regulations may significantly hamper the day-to-day operations of operators stationed there, forcing them to search for alternatives.

An EC Listing Is Bad News for Everyone Involved

The EC is one of the founding members of the Financial Action Task Force (FATF). The international organization focuses on preserving the financial system’s integrity by combating money laundering, the financing of terrorism, and other such threats. As such, the Commission’s list of high-risk third countries carries significant negative implications for all nations unfortunate enough to be included.

A recent warning by the EU may significantly impact businesses involved with such countries. Regulators now face increased pressure to ensure due diligence and will likely crack down on all related parties. Such updated rules may significantly impact many gambling operators, especially those operating out of Gibraltar. The accompanying loss of face can also have severe long-term consequences.

Gibraltar-Licensed Operators Will Face Rising Difficulties

The FATF greylisted the territory in June 2021, followed by an EC listing as a high-risk third country. The implications of such measures for a thriving financial hub like Gibraltar are not pleasant, as all transactions in and out of the country will face increased scrutiny and potential delays. 

The gambling industry, in particular, will bear the brunt of the impact. As of May 2022, the territory hosts 45 licensed online gaming operators employing over 2000 people. The EU demanded enhanced due diligence measures from all businesses and individuals involved with listed nations. 

Such measures aim to combat money laundering and terrorist financing, maintaining the financial system’s integrity. Despite the EC’s attempts to cooperate with local governments and address the issues behind the listing, implementing an action plan can sometimes take years. Meanwhile, bureaucratic pressures can drive current licensees away and dissuade operators from considering a Gibraltar registration.

The Government Aims to Preserve Gibraltar’s Reputation

The EC listing is a significant black mark in Gibraltar’s ongoing efforts to prove its regime robust and effective. Andrew Lyman, the territory’s chief commissioner for gambling, denied any AML/CTF deficiencies, insisting that the local regulator was doing an adequate job. However, the EC did not share the sentiment, leading to this unfavorable situation.

A FATF greylisting can significantly hamper a nation’s international prospects, disincentivizing foreign investments. Despite ongoing uncertainty, Gibraltar’s economic attractiveness and favorable licensing conditions helped it secure several new high-profile licenses. However, the subsequent EC listing may significantly degrade the country’s reputation, meaning the government is hard-pressed to address its ongoing issues.

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The legal battle between Mansion Group, a leading online gambling operator that is globally recognized, and its former CEO, Karel Christian Mañasco, dates back to last year. Back then, the operator filed a claim against Mañasco with the courts in Gibraltar. In its claim, Mansion Group alleged that the former CEO abused his powers and misused company funds.

Mañasco’s tenure with Mansion Group dates back to 2010. In 2012 he was appointed to the role of CFO, while in 2017, Mañasco became CEO. A few years after that, in September 2021, Mansion Group suspended him, launching an investigation into alleged breaches of duty. After that, in December 2021, Mañasco resigned from the company.

“The application of the foregoing principles must be applied in the context that freezing orders  are one of the court’s “draconian  powers,“

reads a judgement released by the Court in Gibraltar

Now, the chief Justice and judge of the Supreme Court in Gibraltar, Anthony Edward Dudley, imposed a global freezing order of £5 million ($6 million) against Mañasco. The court acknowledged that such an order is known as one of its “draconian powers.” Yet, given the allegations against Mañasco and the possible risk of the assets, the Court considered this to be a proportionate measure.

“Mere reliance on the alleged dishonesty of the defendant is not, of itself, sufficient to found a risk of dissipation. The court must scrutinize with care whether what is alleged to have been the dishonesty justifies the inference of a real risk of dissipation,“

explains the recent Court decision

What Do the Allegations against Mañasco Include?

Besides breach of duty, allegations against the former CEO of Mansion Group claim that he used company money for personal expenditures, including six-figure bonuses. Mañasco allegedly paid himself a £427,500 ($514,000) bonus for the 2022 financial year, while in 2019, he received €327,033 ($346,400). Moreover, he allegedly collected a sum of £66,236 ($79,600) which was used for personal expenditures.

Further allegations claim Mañasco authorized or approved the payment of €2,508,035 ($2,656,420) and £127,073 ($152,700) to White Wizard Media Limited, a suspicious company from the Marshall Islands. Mansion claimed that it wasn’t involved in any business with the aforementioned company.

Additionally, Mañasco allegedly obtained multiple luxury vehicles, as well as expensive jewelry at the expense of Mansion. Last but not least, the claims against the former CEO include an accumulation of credit card payments at the expense of the company of some £249,951 ($300,400).

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