The concept of personal criminal liability is becoming a pressing issue for executives in the gaming sector. In a recent episode of Decoding Gaming Law, Dr. Franklin Cachia, Head of Legal at BDO Malta, sat down with Dr Stefano Filletti, Senior Managing Partner at Filletti & Filletti Advocates, to unpack what this shift means for directors and executives across the industry.
The end of the corporate shield
Dr. Filletti opened the discussion by dispelling a common misconception, “One of the basic misconceptions which gaming executives have is by shielding themselves from what they consider to be the corporate shield… That is not the case.”
He explained that while companies remain legally distinct entities, regulators across the EU are increasingly holding individual directors accountable. This includes areas such as money laundering, data protection, consumer and player protection and compliance deficiencies.
“There has been a sharp regulatory and legislative shift in the way of thinking, putting responsibility fairly and squarely personally on directors and gaming company executives in a myriad of scenarios.”
Negligence is no longer a defense
A recurring theme in the discussion on personal criminal liability was negligence. According to Dr. Filletti, simply claiming ignorance of a breach is no longer acceptable. “The ‘I don’t know’ scenario is not a ticket to get out of jail free. On the contrary, saying that makes you guilty of money laundering because the legislation now requires you to take a proactive stance.”
This includes asking the right questions, ensuring robust internal controls, and escalating issues when they arise. He stressed that directors today carry a “duty of oversight” that is active and continuous.
The cross-border challenge
As gaming operations expand globally, cross-border compliance presents further complexity. Dr. Filletti highlighted that being compliant in one jurisdiction does not guarantee compliance in another.
“Consumer law, money laundering, regulatory gaming issues can differ from country to country. Interpretations change from country to country. And if you’re compliant in country A, that does not mean you are necessarily compliant in country B and country C.” This makes strong legal and compliance teams indispensable for gaming companies operating across multiple markets.
The consequences
The penalties for executives found guilty of negligence or misconduct are severe. Dr. Filletti noted that fines for data breaches can reach tens of thousands of euros, while money laundering violations may run into hundreds of thousands. In some cases, imprisonment is also on the table.
“Negligence is an active crime… shutting yourself to the obvious and allowing millions to flow through companies resulted in a very serious breach. There is imprisonment which can go up quite substantially, 10, 15, 18 years.”
Beyond legal penalties, reputational damage can be irreparable. As he put it, “If you have charges of money laundering… your reputation is tarnished. You become a high reputational risk person and companies simply will not touch you. Good luck opening a bank account.”
Best practices for directors
Despite the risks, Dr. Filletti emphasised that this does not mean executives should fear taking on leadership roles. “This is not a situation of doom and gloom. By no way and means should one be afraid to become a director… but like in any other job, you have to be savvy.”
He recommended a proactive approach, including:
- Appointing a strong compliance and legal team.
- Regularly requesting written reports from compliance officers.
- Escalating and addressing issues immediately.
- Documenting all decisions and actions to build a clear record of proactive oversight.
“Insofar as you are vigilant, cautious, and proactive, you shall be fine… Proper compliance goes hand in hand with healthy financial and economic growth in the company.”
In today’s regulatory climate, personal accountability is unavoidable. Gaming executives must take ownership of compliance, embrace proactive oversight and foster strong internal controls to shield themselves from liability.
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