vulnerable to money laundering, an increase from 40. The products and services fall under 11 sectors, 10 which were already in the 4th AML but with an additional category including cash-intensive businesses, virtual currencies crowdfunding and non-profit organisations. Let’s have a quick look at what is included in

cash intensive businesses. Obviously gambling, which is then put next to the likes of bars, restaurants, motor vehicle retailers, auction houses, tobacco stores, strip clubs and massage parlours. Ok, well it also includes construction companies and jewelleries.


There has been no change in the levels of risk for the gambling sector compared to 2017. The reason is not that there is has been no intention to do so, but rather quite the opposite: “The 4th AMLD had to be transposed into national law by 26 June 2017, therefore the effects of the changes introduced by the Directive concerning the gambling sector are difficult to assess at this early stage.” Obviously, the reason why you should care is that information is currently being collected on your activities. And not only yours, but competitors, no matter if there are those that are licensed, regulated, illegal, etc. etc. Of course, it is easier to conduct analysis on legal and regulated business due to reporting mechanisms. Indeed, the Commission reviews both “operators authorised in an EU Member State as well as cross-border offers not authorised under national rules in the recipient Member State.” But, let’s face it, operators, Member States,

regulatory authorities, civil society organisations, etc. will in their interest highlight to the European Commission the problem of operators which impede the legality, and which as such undermines an equal playing field for legal operators. Indeed, the European Commission encourages this.


Within the bigger picture, we can see this extend to the discussions on what regulatory model to apply in individual Member States; something that I have touched upon several

times in previous articles. The argumentation can vary from: There is a need to make other forms of gambling legal so that risks are mitigated to, there should be a ban on certain forms of gambling due to the risk. The latter is often accompanied by the notion that bans should be coupled with better enforcement capacities to mitigate the illegal offer. My point here is really that everyone is in the same boat, and no matter if legal or illegal, one affects the reputation of the other and can as such affect future regulatory contexts within which you will provide products or services (i.e. B2B & B2C).


So, what does the European Commission have to say in relation to “offline” casinos? 1 “Casinos which are run by State monopolies or

public companies appear to be less exposed to infiltration threats, due to regulations in place imposing, for example, transparency on

beneficial ownership.” 2 “Under…[national licensing]…laws national regulatory authorities carry out strong fit and proper checks as well as checks concerning the

origin of the funds involved. 3 “They also vet operators, key staff and

high-ranking employees.” 4 “Stakeholders also point out that casinos typically have stringent systems in place to prevent fraud…” What does this all mean? Essentially, state or public company casinos are lower risk, but casinos are overall still seen as the “most exploited channel to launder money through gambling activities”. Result: Threat level 4 (very significant). Vulnerability level 2 (moderate). As a quick overview of the threat levels currently

identified:  Betting: threat 3, vulnerability 3.  Bingo: threat and vulnerability 1.  Gaming machines outside of casinos: threat

and vulnerability 2.  Lotteries: threat and vulnerability 2.  Poker: 3 in both cases.


Returning focus to offline casinos, I could

explain in detail what they see as risk scenarios, but instead let me leave you with some suggestions in light of what the European Commission is keeping an eye on for the next assessment (and possibly next – 6th – AML

Directive): 1 Cooperation between authorities – i.e. the exchange of information and joint operations – is something emphasised more and more by the Commission and many national regulators. Let’s face it, crime does not stop at borders. Keep being seen as pro-active in this, and I am

sure it will help push the vulnerability level to 1. 2 Member States are encouraged to require relevant authorities to provide a report on whether casinos apply the AML regime effectively. My suggestion: if you are not already doing so, encourage your authorities to provide the report and demonstrate your capacity to

mitigate the threat and vulnerability. 3 Train your staff and compliance officers. No

surprise there… 4 This is not an easy one for many casino operators: Flirt with the idea of player cards or electronic identification schemes. The Commission likes that as it reduces cash.

In my view, the casino industry does not have an easy or easier time ahead unless it proactively engages with relevant authorities, institutions, industry partners, etc. and seeks to constantly demonstrate (of course, within a proportional sense of cost/benefit) its willingness to address the issues above. Reading in between the lines, I can already feel that Commission is looking to impose further measures. For example, they encourage a lower threshold for customer due diligence – i.e. lower than EUR 2,000. Oh, and the one sticky point I remember from when I was working on the file: Article 11 (d) regarding the implementation of “customer due diligence in case of several operations which appear to be linked”. The amount of questions that raises is immeasurable. Be aware, the Commission is flirting with providing guidance thereto. The costs rather than only the questions could become immeasurable.

Greetings from Brussels.

OCTOBER 2019 35

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