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AML


of the due diligence reports uncovered high-ranking PEPs


among the directors or owners of the third-party company  19% of the cases showed links to companies listed in the


leaked database of offshore records known as Panama papers  15% of cases share a combination of PEP and negative


media risk  15% of cases found a fine or injunction imposed by the third-party company’s sector regulator


Political exposure – additional details


The analysis on politically exposed persons focuses on officials (other than junior officials) entrusted with prominent public functions either in a government body or international organisation, as well as their family members and close business associates. In our analysis, we have found that 27% of all third-party companies had PEPs in their board, C-level management team or beneficial owner(s). Also, out of those PEPs, 8% were high-ranking government officials such as ministers and deputy or assistant ministers, members of parliament or of similar legislative bodies, top officials of mainstream political parties, or members of legislative and executive bodies at regional, provincial, cantonal or equivalent levels.


Negative media coverage – additional details


Negative media checks focus on people and entities identified in official, non-official and media sources as having been involved or alleged to have been involved in several distinct categories of misconduct. These include financial crime and fraud, bribery and corruption, cybercrime and other alleged offences as defined by FATF, the UN, the EU, international law enforcement agencies and regulators in the UK and the USA. The analysis found that 15% of cases share a combination of PEP and negative media risk.


Regulatory and litigation – additional details


Apart from reputational risks, we analysed additional commercial and business information that helps gaming industry participants decide whether they should enter a business relationship with a third party. This includes regulatory, bankruptcy and litigation checks. Our regulatory checks focus on any fines and compulsory measures imposed by gaming, competition protection, data privacy, financial market and anti- money laundering bodies, and additional relevant regulatory bodies in various jurisdictions. Our


litigation checks focus on civil disputes between the third-party company and any of its vendors, management or employees. They also look for criminal proceedings against key management personnel, beneficial owners or the entity itself (where the jurisdiction of interest allows for legal entities to have criminal liability). Examples of identified regulatory actions taken against a


party in a B2B transaction include:  Added to the list of illegal gambling operators after a


decision of the Vilnius Regional Administrative Court  Fined for infringement of the Romanian national and


community competition law  Violation of the National Gambling Act of 2004, which


banned online gambling in South Africa  Injunction prohibits director from making any change or


action relating to his shareholdings in casinos in Morocco Beneficial ownership


When it comes to beneficial ownership, in 12% of cases we found beneficial owner links to high-risk jurisdictions that were unknown to the client. Increasingly complex company structures and networks make relationships to high-risk countries hard to uncover and often require searching through multiple layers of ownership and jurisdictions. Use of offshore companies, trusts, nominee shareholders, foundations, partnerships, and other types of legal arrangements are also common. Third-party providers associated with higher-risk countries


The analysis found that 15% of cases share a combination of PEP and negative media risk


FEBRUARY 2020 83


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