AML guide issued for gambling operators

Out-Law News | 13 Jan 2020 | 2:08 pm | 2 min. read

Gambling operators have been urged to review and update their policies, procedures and controls for combatting money laundering and terrorist financing in light of new guidance issued by the Gambling Commission.

The guidance is directed at casinos licensed in Great Britain and addresses the legal obligations they face under new UK anti-money laundering (AML) and counter terrorist financing (CTF) regulations that took effect on 10 January. However, gambling law experts Audrey Ferrie and Christopher Rees-Gay of Pinsent Masons, the law firm behind Out-Law, said the guidance holds lessons for all gambling operators.

"Positive action must be taken by all casino operators to review and amend their AML policies procedures and controls as soon as possible," Rees-Gay said.

"There is an acknowledgement from the Commission that 'it takes time to implement changes', but it also stresses that it expects 'to see that operators have acted promptly, invested appropriately and implemented changes with the requisite urgency'. In this respect, it would have been useful for the industry to have had this guidance earlier," he said.

Ferrie said: "Although the Gambling Commission published the updated on the same date that the new AML and CTF regulations took effect, the regulator will expect operators to have been preparing for these changes for some time by updating their systems and training staff. In my view, the Commission has sought to provide more detailed guidance than in previous editions."

Under the new AML and CTF regulations, casino operators are obliged to take appropriate steps, taking into account the size and nature of their business, to identify and assess the risks of money laundering and terrorist financing to which its business is subject. The specific steps the operators need to take must be informed information on the risks of money laundering and terrorist financing made available to them by the Commission, as well as risk factors, including those relating to customers, the countries or geographic areas in which they operate and their products or service, as well as their transactions and delivery channels.

In its guidance, the Commission provided more detail on the risk that operators can face in relation to those various factors. It endorsed a "dynamic" approach to risk management, and outlined its expectations of operators in relation to customer monitoring where the customer appears to pose a risk of actual or potential money laundering.

The guidance also addresses operators' obligations on customer due diligence and identification and verification, including criteria for using electronic verification providers, as well as their new duties on record keeping and the reporting of suspicious activities.

A report published by the Gambling Commission last year highlighted the risks of money laundering in the British gambling market. Some of the biggest risks of money laundering flagged in the report included 'chip dumping' in online games of poker, and from customers of online betting or bingo providers laundering criminally derived funds from within "high risk or non-cooperative jurisdictions". Emerging risks, such as those stemming from cashless payments and the potential use of cryptocurrencies, were also highlighted in the report.