By June this year Member States, including the UK, must transpose the EU 4th Anti-Money Laundering Directive (4AMLD) into national law. The fast approaching directive includes requirements for all forms of gambling services to strengthen anti-money laundering requirements. Add to this backdrop, the UK Gambling Commission's new License Conditions and Codes of Practice and spate of recent voluntary settlements, the stakes for non-compliance for the sector get higher every day.
The Gambling Commission revealed in early 2016 that there were 633 reports from bookmakers that criminals were using their premises to launder money obtained through the illegal drug trade. The operations – which centre on so-called Fixed Odds Betting Terminals (FOBTs) – are thought to have involved millions of pounds.
This report suggests that drug barons use the services of "cleaners" to launder money through the machines which can take single bets of up to £100 on virtual horse races and other games every 20 seconds. These cleaners are thought to have been leaving the betting shops with as much as 90% of their money in winnings after laundering it through the machines.
The research, which was conducted by the Commission in collaboration with the National Crime Agency, was released on the eve of the implementation of the European Union's Fourth Anti-Money Laundering Directive (4MLD).
The 4MLD's predecessor – the Third Directive – only covered casinos, but from 2017 all member states will have to prove that their gambling sector is at low risk of laundering before being exempt from the legislation. In the UK, the Treasury are finalising the Money Laundering Regulations that will pass into law in June this year.
The most important part of the directive potentially affecting the gambling sector is enforcing a €2,000 limit on stakes or winnings before the rules are triggered. The Treasury will need to decide whether to implement a regulation which will have a major impact on an industry where many stakes and payouts are considerably above this threshold, particularly in sports such as horse racing and other high-odds sporting events.
In advance of the new directive, the Gambling Commission consulted its members on changes to its License Conditions and Codes of Practice. After completion of the consultation, the commission updated the code in October 2016 with stronger anti-money laundering requirements. For example, remote casino operators with gambling equipment located outside Great Britain now need to comply with the money laundering regulations.
In an article that first appeared in 'inCOMPLIANCE', the official member publication of the International Compliance Association, Tim Tyler, Senior Manager, AML Lead at the Gambling Commission, said:
"Bookmakers in particular are vulnerable with a culture of anonymous betting in cash, but every corner of the thriving British gambling sector faces challenges in meeting the threat."
"As we look ahead to the adoption and implementation of the 4MLD, this challenge is brought into sharper focus. Large operators will need to invest the required time, funds and energy to understand and apply the provisions. For some this will entail significant cultural change, demanding a shift in attitudes and priorities in order to become compliant with the demands of the ML Regulations."
Tyler concluded, "The adoption of the 4MLD will throw a spotlight on the work of the industry to meet these requirements, raising the bar still higher as it at the same time sets out a framework to meet the challenge."
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