Insight RUSSIA Black and white listing


Bill could present a stark choice for online operators in Russia


Ilya Machavariani, Senior Partner 4H Agency


4H Agency is a boutique consulting firm working across from offices in Cyprus, Ukraine and Russia providing various services from legal, banking, consulting and marketing providing a ‘one top shop’ for international gambling operators entering certain jurisdictions.


4H Agency is fully dedicated to serving members of the gambling business ecosystem in their quest to open up new opportunities, be it a new market, vertical, or new product.


www.4h.agency sayhi@4h.agency


Ilya Machavariani is a Senior Partner and CEO of the 4H Agency, discusses the issues facing operators accepting Russian players without a Russian licence as the government seeks to make this a ‘black’ or ‘white’ issue.


On April 22, 2021, in the First Reading, members of the Russian State Duma adopted the bill (No. 1133991- 7) amending a number of Federal laws in order to improve the measures of combating illegal gambling operators. Now the bill has to undergo a number of amendments before it moves on to the subsequent readings withing the government halls.


Central to this initiative would be the introduction of the criteria to determine whether the gambling operations are being conducted within the territory of the Russian Federation or elsewhere. Tese criteria are:


l Player location;


l Bank or EMI location; l IP address of the player; l Phone code of the player.


This bill changes the risk profile for operators in accepting Russian players without a Russian licence, as it removes the potential for doubt in determining whether that firm is offshore. Essentially it might be fair to say that if this bill passes then the “point-of-consumption” regime would be fully installed in Russia.


P258 WIRE / PULSE / INSIGHT / REPORTS


If one of the above criteria is linked to Russia (i.e. the player is living in Russia) then it will be considered that gambling is happening in Russia for the purposes of Russian legislation and existing overarching restriction for online gambling.


Tis bill changes the risk profile for operators in accepting Russian players without a Russian licence, as it removes the potential for doubt in determining whether that firm is offshore. Essentially it might be fair to say that if this bill passes then the “point-of- consumption” regime would be fully installed in Russia.


If the bill passes all three readings in the State Duma, then offshore payment institutions once caught transferring funds to a ‘blacklisted’ gambling operator (said blacklist was introduced in 2018) will be included in a separate list of payment institutions working with illegal offshore gambling companies. Tis means that all payments from Russian players to the blacklisted payment institution would be blocked


within the Russian perimeter akin to the existing payments blockings mechanism.


In contrast to the blacklist mentioned above, the bill also introduces a concept of a “white list” where each and every regulated gambling operator in Russia would be listed (both landbased - including casino operators in the gambling zone - and online). Te idea of this list is that Russian financial institutions are forbidden from entering into any contracts with entities that are not in this list.


Having analysed the supporting documentation to the bill, we’d like to draw your attention to the fact that the Russian authorities are going to install administrative liability for payment institutions violating the requirement not to transfer any payments to offshore gambling operators in the blacklist and outside whitelist. Additionally, the Russian regulator is granted with the right to block websites of not only offshore operators but payment institutions.


If the bill passes all three readings in the State Duma, then offshore payment institutions once caught transferring funds to a “blacklisted” gambling


operator (said blacklist was introduced in 2018) will be included in a separate list of payment institutions working with illegal offshore gambling companies. This means that all payments from Russian players to the blacklisted


payment institution would be blocked within the Russian perimeter akin to the existing payments blockings mechanism.


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