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ACURIS RISK INTELLIGENCE


Acuris Risk Intelligence


Observations on the gaming industry: business-to- business anti-money laundering risks and trends.


contract with. The assessment of these risks is based, among other things, on the risks posed to the operator by transactions with business associates and third-party suppliers such as payment providers, including their beneficial ownership structure and funding sources. While customer due diligence receives most attention


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from gaming companies’ legal and compliance departments, we believe business-to-business (B2B) relationship due diligence, which presents significant risk, is often overlooked Over time we have seen many examples related to B2B


relationships where gaming companies have conducted only a basic corporate verification check of a third party, focusing on their company number, country of incorporation and representatives. And in many cases, companies believe that if they are doing business with someone who holds a licence from a regulatory body such as the UKGC or Malta Gaming Authority (MGA), due diligence doesn’t need to be undertaken again by the subject person or company which is a real example of the misunderstanding of the regulatory framework and expectations. As part of its risk assessment process, the research team at


Acuris Risk Intelligence carries out due diligence daily on multiple B2B relationships within the gaming sector, including regulators, vendors, suppliers, intermediaries, contractors and other service providers. As indicated by the UKGC the risk assessment process should consist of three standard stages: Identification, Analysis and Evaluation. These due diligence investigations assist the industry in the Identification stage. In order for the customer to be well educated during the Analysis and Evaluation steps of the risk assessment, we rely on a combination of compliance solutions, proprietary data and human intelligence with access to government, media and proprietary sources. While in some cases, due diligence has identified minor risks such as fines, we have also, in a number of cases identified unknown parties within business relationships such as beneficiaries, trustees and shadow directors. In some cases, direct links to Political Exposure (PEPs) and people with high money-laundering, reputational, cyber and


82 FEBRUARY 2020


ccording to the United Kingdom Gambling Commission (UKGC), licence holders should give due consideration to the money laundering risks posed by their business- to-business relationships, including any third parties they


additional risks were also uncovered. Those risks were critical during the risk assessment process and in the decision of our clients to accept or reject the B2B relationship with the third party.


Analysis highlights


For factual analysis of the risks associated with B2B gambling relationships, we have summarised the findings from 60 B2B Enhanced Due Diligence (EDD)reports undertaken specifically for the gaming industry. These reports cover subject companies in multiple jurisdictions, from Europe, Asia-Pacific, the Middle East, the Americas and through to Sub-Saharan Africa. The research concluded five


main risks in B2B relationships:  Reputational – risk of damage to reputation, good name,


brand image or negative media coverage  Financial – risk of loss of funds or delayed service


provision  Regulatory – risk of administrative measures, fines or


revocation of licenses and additional permits  Cyber – risk of loss key data or security breaches as a


result of the B2B relationship  Transparency – risk of non-compliance with AML, anti-terrorist financing and tax compliance requirements.


To identify these risks, the research methodology focused on uncovering any information on the third-party subject


company related to:  Beneficial ownership  Political exposure of senior management team, members


of the board of director or beneficial owner(s)  Countries of operation and management of the third party  Participation of the third-party in regulatory and


litigation proceedings and a defendant(s)  Negative media coverage and additional reputational risks  Sanctions imposed by UN, EU, OFAC, Austrac, HMT and


additional competent bodies  Country-specific sources – media publications in local


language, trade journals, company and court registers, government and proprietary databases.


The findings of the reports concluded:  55% of entities show negative media coverage of the


third-party company, its directors or beneficial owner  26% of third-party companies are linked to PEPs, while 8%


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