European Commission raises igaming money laundering threat level
The European Commission has placed online gambling at the highest threat level, while the risk from land-based casinos has fallen.
Brussels.- The European Commission has lifted the money laundering threat level it assigns to online gambling. Classing igaming at the highest level, the EC has called for the introduction of lower thresholds for due diligence checks.
The commission’s 2022 risk assessment of money laundering and terrorist financing is its third periodic analysis, following previous assessments in 2017 and 2019. Gambling received particular focus, with separate risk assessments compiled for different verticals.
Online gambling was classed as “very high” risk and was found to be particularly vulnerable due to the use of digital currencies.
The EC said: “Despite several risk-based measures already being implemented by many EU online operators (for example anti-money laundering training sessions for employees, customer due diligence and ‘know-your-customer’ processes), 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.”
Recommendations for EU online gambling
The commission noted that self-regulation had been successful to an extent in many markets, but it said that authorities needed to provide the industry with greater clarity.
It said: “In many member states online gambling operators have developed a good level of self-regulation and risk assessment, although their cooperation with competent authorities and financial intelligence units could be improved.
“Operators believe that they do not get clear guidance on how to properly address the risks considering, in particular, the lack of feedback from financial intelligence units on suspicious transaction reports.”
The EC made several recommendations for EU members. It proposed that states lower the threshold of winnings subject to customer due diligence from the current €2,000. It also suggested that member states should ensure online gambling operators organise regular training sessions for staff and compliance officers and that players do not hold multiple accounts with the same brand.
Land-based casinos and other verticals
Meanwhile, the assessment of the risk of land-based casinos found significant improvements. The vertical’s risk classification was lowered from “very high” to “medium” after the EC found that the inclusion of casinos in the EU’s AML/CFT framework had mitigated the risk of money laundering.
The assessment found that the biggest risk in the vertical was from the infiltration of members of money laundering schemes among casino staff.
It said: “Casinos are considered to be exposed to infiltration risks, although for casinos owned by the state or public companies, this level of risk is lower. Hence, the risk of casinos being exploited for money laundering appears high, and the level of the threat posed by money laundering to casinos is considered moderately significant.
“Despite an overall good picture, law enforcement agencies are still identifying some weaknesses, which suggests that the current legal framework is not correctly applied. The number of money laundering cases investigated by law enforcement agencies seems to show that there is still room for improvement.”
The risk levels of poker and retail betting remained “high” while the risk of lotteries and gaming machines outside of casinos was classified as “medium”. Bingo was assigned a “low” risk level.
In June, Malta was removed from the FATF’s grey list of untrustworthy jurisdictions, but Gibraltar was added to it. Gibraltar remains on the list and has delayed its reporting. It recently announced plans to introduce new gambling licences and a tiered system for fees.
