Gambling regulator sets expectations on anti-money laundering

Out-Law News | 28 Jun 2019 | 9:05 am | 2 min. read

All gambling operators in the British market should endeavour to maintain the highest standards of anti-money laundering practices even if it is only casinos that face legally-binding requirements to combat such risk, legal experts have said.

Specialist in corporate crime law Stacy Keen, and gambling regulation expert colleague Audrey Ferrie, both of Pinsent Masons, the law firm behind Out-Law, were commenting after the Gambling Commission published a new report on the risks of money laundering in the British gambling market.

Some of the biggest risks of money laundering in the sector that were 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.

The report set out steps gambling operators can take to address the risks posed, and pointed to existing guidance and support available to help them.

Currently, casinos, both those that operate remotely and on the high street, are the only type of gambling operators subject to anti-money laundering laws in the UK. The decision to exempt operators from all other sub-sectors of the gambling market from the AML regulations was taken on the "basis of the proven low risk posed by the nature and, where appropriate, the scale of operations of such services", the UK government said at the time.

Keen and Ferrie said, though, that all gambling operators active in the British market do face other legal and licensing obligations in connection with the fight against financial crime and terrorist financing, and that they should use the Gambling Commission's report to inform their own risk assessments.

UK proceeds of crime and terrorism laws require all gambling operators active in the UK to take steps to mitigate financial crime, and it is also a condition of their gambling licence that they keep crime and its proceeds out of gambling.

"At present only remote and non-remote casinos are subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017," Stacy Keen of Pinsent Masons said. "When implementing the EU's Fourth Anti-Money Laundering Directive, the UK government used powers provided within the directive to exempt gambling sectors which are lower risk. However, it has previously warned that it could use its powers to include other sectors within the UK AML regulations at a later date if those sectors are assessed as being higher risk."

"The 2018 risk assessment details the Gambling Commission evaluation of risk across all gambling sectors between November 2017 and October 2018. The overall risk ratings after assessment have barely changed in comparison to the risk assessment exercise carried out in the previous year – published in March 2018 – albeit there are new sub-categories presented and terrorist financing is being assessed separately for the first time," she said.

Audrey Ferrie of Pinsent Masons said: "The clear message from the Commission is that it will expect operators to consider these risks as part of their own assessments even if they are not covered by the regulations at present." 

The Gambling Commission said: "It is imperative for all gambling operators, regardless of gambling sector, to ensure they have effective risk assessments, policies, procedures and controls in place to prevent [money laundering and terrorist financing] and continue to raise standards in that regard."