SBC News Voice of the Sports Betting Industry
The Financial Action Task Force (FATF) has updated its recommendations on how EU member states should conduct risk assessments against anti-money laundering (AML) and countering financing of terrorism (CFT) threats.
New industry-specific recommendations have been provided via the European Commission’s (EC) ‘Supranational Risk Assessment (SNRA) Report’, which was last updated in 2019.
Under the EU ‘Anti-money Laundering Directive’ (AMLD) the SNRA report is required to be updated every two years. However, due to COVID-19 pandemic circumstances, the report was delayed to 2022, allowing AML stakeholders to make better judgements on specific sectors.
Of significance, the report underlines online gambling alongside crypto-assets as two sectors which required a “re-calculation of risk levels involved” as “significant changes have been detected”.
The FATF further recognises current conflicts impacting European business as member states recover from the aftermath of the COVID-19 pandemic amid Russia’s escalating war of aggression against Ukraine.
The above circumstances have exacerbated money laundering risks across economic sectors and business activities throughout the EU, creating new opportunities for criminals to take advantage of.
Research conducted on AML and CFT threats was undertaken on 43 products/services which were grouped into eight business categories, including gambling.
“The gambling sector is characterised by fast economic growth and technological development, with a strong growth of the online sector during and after the COVID-19 pandemic,” detailed the SNRA’s category overview.
“In this regard, a number of competent authorities reported that risks arising from online gambling have increased further since the publication of the last SNRA in 2019.”
Despite regulatory improvements, the report underlined that land-based casinos still factor an inherently high-risk exposure to AML threats attributed to cash transactions.
Cash transactions remain criminal gangs “most popular store of value even in the wake of the COVID-19 pandemic”. The report highlighted the “paradox of banknotes”, in which demand for € banknotes had increased in a two-year period which saw cash retail transactions visibly decline across Europe.
“In spite of the changing face of criminality, the criminal economy remains overwhelmingly cash-based, which exposes the EU to significant ML/TF risks due to the anonymity and relative ease of movement associated with cash and cash-like assets.
“For online gambling, AML threats are primarily related to the vulnerability of member states being targeted by “the emergence of unauthorised online gambling operators.”
Of note, unlicensed operators have gained further capabilities to target weak AML authorities by servicing financial transactions via anonymous e-money platforms and processing virtual currencies.
The FATF branded gambling as a sector which lacks specific tailored reporting/feedback on suspicious transactions, recommending European FIUs to improve the quality of industry reports and the use made of the information provided.
Gambling AML safeguards would further be improved by “Member States ensuring adequate training focusing on appropriate risk assessments of relevant products/business models for staff, compliance officers and retailers”.
The FATF maintains its 2019 headline recommendation for European authorities, citing that business anonymity on ownership remained the most critical vulnerability for all sectors and activities.
