Anti-Money Laundering (AML) regulations are particularly important for the gambling industry, as this is a sector which is considered vulnerable to being used for money laundering and terrorist financing (ML/TF) due to the high volume of cash transactions involved. In Europe, the gambling industry is subject to AML regulations at both the national and EU levels.
In recent years, the EU has introduced several directives that are relevant to the gambling industry, including the Fourth Money Laundering Directive (4MLD) and the Fifth Money Laundering Directive (5MLD). Additionally, the European Union has adopted the directive (EU)1673/2018 which is about criminalizing money laundering. These directives provide a framework for identifying and verifying customers, reporting suspicious transactions, and conducting due diligence on business relationships, which are particularly relevant for gambling operators.
The regulatory requirements for the gambling industry in the EU can be broadly classified into two categories: those that apply to land-based gambling activities and those that apply to online gambling activities.
The AML regulations for the gambling industry within the EU vary among national regulatory authorities, with differing approaches and requirements. For instance, some countries mandate gambling operators to register with the national regulator and undergo routine inspections, while others require operators to implement specific AML policies and procedures.
Below are examples of the AML requirements for the gambling industry in specific EU countries.
Supervisory Authority: Gemeinsame Glücksspielbehörde der Länder (GGL) – (Gambling Authority of the Federal States of Germany)
- License is required
- The application must include comprehensive descriptions that demonstrate individual reliability, capability, transparency and security of the business.
Specific AML Obligations for the gambling industry in Germany:
- Customer Due Diligence (CDD) and Know-Your-Customer (KYC) procedures
- Anonymous payment methods i.e. cash vouchers are prohibited in online gambling-related transactions
- Requirement for the operator to establish that the player is the actual owner of the payment account held with a Payment Service Provider (PSP).
Supervisory Authority: Malta Gambling Authority (MGA)
MGA is the supervisory authority for land-based and remote gaming. Under the Prevention of Money Laundering Act (PMLA)
- License required
- Renewal of license: Gambling companies can only renew their licenses if they can satisfy the authority that they have the necessary policies, procedures and systems in place to effectively manage the inherent money laundering and terrorist financing (ML/TF) risks associated with the industry.
Specific AML Obligations for the gambling industry in Malta:
Casino and gaming licensees offering type 1, 2 and 3 games to apply a risk-based approach in their AML/CFT measures, controls and procedures by implementing the following:
- Business risk assessment
- Customer Acceptance Policy
- Documented AML/CFT policies and procedures
- Customer Due Diligence on their customers.
- Appoint a Money Laundering Reporting Officer (MLRO) who is registered with the Financial Intelligence Analysis Unit (FIAU)
- Systems to identify and file Suspicious Transaction Reports (STRs)
- The Estonian Tax and Customs Board (ETCB) exercises state supervision over the organisation of gambling.
- The Consumer Protection Board exercises state supervision over the area of consumer laws and advertising.
- The Financial Intelligence Unit (FIU) exercises state supervision over the area of preventing money laundering and terrorist financing.
- The Estonian Gambling Authority (EGA) responsible for issuing operating permits for organizing gambling in Estonia.
- First apply for an activity license of organising gambling and an operating permit from ETCB.
- The activity license gives the right to then apply for an operating permit from Estonian Gambling Authority (EGA)
- A separate activity licence is required to provide each type of game.
Specific AML Obligations for the gambling industry in Estonia:
- Risk assessment measures
- Identification, verification and Due diligence procedures
- Understanding the profiles of their clients
- Ongoing monitoring of the business relationship
- Report suspicious transactions to the FIU
- The Cyprus Gambling Commission
- National Betting Authority
- License required for betting and gambling.
Specific AML Obligations for the gambling industry in Cyprus:
Casinos and betting companies are required to establish the following AML measures:
- Customer identification and CDD requirements
- Record-keeping arrangements
- Internal reporting and external reporting of suspicious transactions to the FIU
- Internal controls, risk assessments and risk management arrangements
- Detailed examination of each transaction which is by its nature vulnerable to ML/TF, complex or unusually large or has no apparent economic rationale
- Compliance management arrangements
- The recruitment and evaluation of the integrity of the employees.
The gambling industry in Europe is subject to a variety of regulations aimed at preventing money laundering and other illicit activities, protecting consumers, and ensuring fair competition.
While complying with these regulations may entail costs and operational challenges for gambling operators, it is essential for maintaining the integrity of the industry and preventing financial crime. Moreover, effective AML/CFT measures can enhance the reputation and sustainability of gambling businesses, by fostering confidence in customers and investors, and by demonstrating a commitment to responsible business practices.
As the regulatory landscape continues to evolve in response to new threats and opportunities, gambling operators will need to stay abreast of the latest developments and adopt a proactive and collaborative approach to compliance.