European Commission Blasts Inattention to Money Laundering in Online Gambling - Newstbt.com

After conducting an investigation on the way Europe’s gaming operations handle AML methods, the European Commission (EC) has found the results to be unsatisfactory. This could lead to stricter protocols for the online gaming industry.

On September 14, European Commission President Ursula von der Leyen delivered her State of the Union address to the European Parliament in Strasbourg, France. After a review of the EU gaming industry’s AML activity, the Commission found areas in need of improvement. As it has judged the money laundering threat in the online gaming sector to be at the highest level, the organization requested countries and operators implement stricter due diligence checks. Dissimilarly, the land-based segment has seen great progress, performing better than ever. This provided more incentive for the EC to conduct another financial laundering and terrorist financing risk assessment in 2020, which is sure to focus on the fast-evolving gaming industry. (Image: Associated Press)

The European Commission (EC) has issued a stern warning to the online gaming sector, citing potential money laundering risks as very high. The EC noted the particular vulnerability of cryptocurrencies, which are not legally valid in many nations. The EC further stated that “[the] exposure to money laundering risks in online gambling is still rather high, as it encompasses significant factors such as the non-face-to-face element, huge and complex volumes of transactions, and financial flows.” In light of this warning, a crackdown on iGaming is likely to follow.

iGaming Faces Crackdown

After assessing the risk from land-based casinos, the European Commission (EC) determined that, since the implementation of the European Union’s (EU) anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, the risk rating has lowered to “medium” from “very high,” with the greatest risk being the infiltration of casino staff to commit money laundering. Nevertheless, casinos owned by the government and public companies are less at risk. Nonetheless, land-based casinos remain a “moderately significant” target for criminal activities. The EU has further stated that law enforcement agencies have uncovered weaknesses in the retail casino segment, suggesting that either regulators are not properly implementing the rules or some operators are not following them.

The assessment showed that the risk levels for poker and retail betting stayed high, whereas lotteries, gaming machines, and other non-casino gambling were identified as medium risk. Bingo had the lowest risk level of all. It is now time for a comprehensive reassessment.

Time for Another Overhaul

The comparison between the two segments shows positive developments in certain areas. Despite self-regulation leading to successes in some markets, there is a lack of clarity in the industry that needs to be remedied by authorities. This was made evident when Malta was placed on the Financial Action Task Force’s (FATF) greylist for AML concerns and later removed, while Gibraltar was placed on the list in its place. The diverging approaches to regulation in the two jurisdictions has caused confusion for operators. The European Commission (EC) is aware of this, and has noted that operators feel they lack the guidance necessary to make sure their practices are compliant. This could open up a need for unified regulations across Europe, something which the EU and certain member states are already pushing for. To tackle this issue, the EC has formulated some suggestions for its members.

they recommended lowering the current winnings threshold of €2,000 (US$1,955) to a lower level with proper customer due diligence. Furthermore, with the support of their respective jurisdictional regulators, operators must make sure that users cannot have multiple accounts. This is already being implemented in Europe, with the UK Gambling Commission poised to introduce a “single customer view” across all operators’ platforms in the country.