One of the sectors that financial criminals see as a target for money laundering and terrorist financing is the Gaming and Gambling industry. Money laundering techniques are used to convert funds from criminal activities into legal money in the Gaming and Gambling industry. Gaming and gambling businesses have specific responsibilities to prevent these crimes.
All gaming and gambling ındustries are subject to the Proceeds of Crime Act (POCA). The gaming and gambling industry is also subject to and has to comply with national or local regulations such as Moneyval, FATF, and European Union Directives in order to anti-money laundering and terrorist financing. In addition to the regulations, each gambling business has to have a comprehensive AML Compliance Program suitable for its business.
The US AML Regulation for Gambling Industry
The United States has some regulations for legal gambling states. One of the main regulators has the authority to review the Financial Crimes Protection Network (FinCEN) gambling businesses for compliance with the Bank Privacy Act (BSA) and violations of the law. But FinCEN has delegated its compliance review authority to the Internal Revenue Service (IRS). If the IRS detects a significant BSA violation in both its casino and its review, FinCEN initiates an investigation into that casino, and an administrative penalty is imposed on the casino based on the outcome of the investigation. At this point, FinCEN and IRS cooperate to detect BSA violations in casinos in the USA and to take criminal action. The U.S. Bank Privacy Act (BSA) has some regulatory requirements for the gaming and gambling industry, including:
- Creation of Suspicious Activity Reports (SARs) when at least $ 5,000 suspicious transactions are carried out
- Creating Currency Transaction Reports (CTRs) in cash inflows and outflows in excess of $ 10,000
- Application of the most suitable AML compliance programs within the casino
- Keeping track of customers' debts or loans, such as credit extensions over $ 10,000, and keeping those records for up to five years
Besides BSA, FinCEN also has some regulations and recommendations for the industry. FinCEN, published in 2010 for the gaming gambling industry, contains the following information:
- An internal control system should be created to ensure continuous compliance with BSA.
- Training of casino staff to identify unusual or suspicious transactions
- Making and keeping a record required under BSA
- Eligibility tests for money laundering and terrorist financing risks resulting from the products and services provided
- Determining the name, address, social security or taxpayer-identification number and other identifying information for a person
Australia AML Regulation for Gambling Industry
There are some regulations for controlling the Australian or gaming and gambling industry and reducing risks. In Australia, AUSTRAC regulates some commercial activities in the gambling sectors with the Money Laundering and Counter-Terrorism Financing Law published in 2006. If a gambling business has a geographic connection with Australia, AUSTRAC is considered a legal entity that has to report. Under the law, casinos have obligations such as notifying AUSTRAC of some business activities and transactions, keeping records, and conducting the AML / CTF program. In Australia, gambling agencies or bookmakers, Casinos, Bars, clubs, and providers of electronic gaming machines under the gaming and gambling industry are subject to these regulations. Australia is also the gambling jurisdiction with one of the strictest compatibility requirements in the world.
Another Australian gambling regulator is the National Consumer Protection Framework (NCPF). The purpose of NCPF is to introduce a variety of regulations that focus on minimizing the harms of risks such as money laundering in the gambling industry responsible for the execution of online bets in Australia. NCPF measures have some minimum standards, and states follow these recommendations. Some of these measures are:
- reduction of customer verification time
- prohibition of credit limits for betting purposes
- creating some prohibitions on specified incentives
- clarification of account closing mechanisms
- giving activity statements to customers
- deterring the use of payday loans for online betting
- implementation of a voluntary pre-commitment program
- training of staff on responsible behavior of gambling
The European Union (EU) AML Regulation for Gambling Industry
The European Union does not have direct industry-specific EU legislation in the field of gambling services for the Gaming and Gambling industry. As required by the EU Court of Justice, EU countries may arrange their own gambling services if they comply with the basic rules established under the Treaty on the Functioning of the European Union (TFEU). EU countries are also allowed to offer some games of chance through the Internet. In some European countries, monopolistic regimes that provide online gambling services have been established. A government-controlled public operator manages these serving online gambling services. In addition, many EU countries have installed licensing systems that allow multiple operators to offer services in the market. Online gambling regulation in EU countries is determined and established according to established legal rules. The European Union commission supports efforts to modernize national online gambling legal frameworks in EU countries. In addition, it supports all consumers to ensure a high level of protection.
Required Regulations for the Gambling Industries in the 4AMLD
4. Anti-Money Laundering Directive is mandatory for all gambling businesses. This is because some gambling products have a high risk of money laundering. It is seen that ineffective controls cause land-based betting and poker situation. Member States may decide to grant a full or partial exemption to gambling businesses. On the other side, the online gambling industry also has high risks due to a large number of transaction flows and a lack of face-to-face interaction. Despite the high-risk exposures of casinos, it has had a mitigating effect since 2005 to counter money laundering and financing of terrorism. Lottery and game machines offer a moderate risk of money laundering and terrorist financing. In addition, black-based bingo offers a low risk of money laundering and terrorist financing due to relatively low bets and winnings.
In general, 4AMLD directives are also aimed at performing procedures such as Know Your Customer (KYC), Customer Due Diligence (CDD) in the gaming and gambling industry. With these procedures, casinos can identify the risks posed by their customers and evaluate these risks and take the necessary measures.
AML Penalties for the Gaming and Gambling Industry
All gambling businesses in the world are subject to a local or national AML regulation. The main purpose of these regulations is to minimize or eliminate money laundering and terrorist financing risks in this sector. These risks can be reduced by procedures such as Know Your Customer (KYC) and Customer Due Diligence (CDD) recommended by regulators. Enterprises in the Gaming and Gambling industry must comply with these regulations and obligations. If they do not, criminal proceedings are initiated against these institutions.
Unfortunately, this is a fact that some gaming and gambling businesses do not comply with these regulations, so and criminal proceedings are initiated about them. A notable striking example is that The UK Gambling Commission stated that the two online gaming companies would pay a total of £ 2.8 million, as they are delayed in following their respective money laundering (AML) compliance programs. Osaka-based Platinum Gaming Ltd and London-based Gamesys Ltd did not implement adequate AML control and received this penalty because they did not protect their customers from possible gambling risks. In addition to this example, FinCEN has also criminalized some gambling industries that do not comply with the regulation. Between 2003 and 2014, FinCEN imposed three criminal penalties of $ 1.6 million against casinos. In contrast, between 2015 and 2016, he applied approximately $ 110 million in a criminal action to casinos and has made four major sanctions since 2016.
Sanction Scanner AML Compliance For Gaming and Gambling Industries
Financial crime risks increased with the globalization of the gaming and gambling industries. According to FATF, and European Union directives and regulations, gaming and gambling organizations are required to comply with the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regulations. If they do not comply with these regulations, they receive certain penalties. The AML, CFT, and KYC compliance process of gaming and gambling businesses do not have to be difficult. Sanction Scanner helps AML and KYC compliance processes by offering tailored solutions for the gaming and gambling industry. With our sanction and PEP scanning service, organizations can easily and quickly manage customer engagement, customer monitoring, and transaction monitoring processes. Sanction Scanner's AML compatibility solutions allow you to comply with global and local AML regulations. Contact us for more information about our AML solutions.