Money laundering is a centuries-old problem and one which has become a major concern in an age which is both global and digital. The nature of the gambling sector is such that it can be an attractive target for criminals, which is why reputable gambling operators have long seen the implementation of anti-money-laundering strategies as an important part of their business, as have the relevant regulatory bodies and lawmakers.
The EU 4th Money Laundering Directive and The Proceeds of Crime Act 2002
These two documents form the backbone of the UK’s strategy on money-laundering prevention both in general and with regard to the gambling industry in particular. In simple terms, between them they place a responsibility on all gambling operators (and other industries) to take reasonable measures to prevent anyone from using them as a means of benefiting from criminal activity in general and specifically to be alert to the possibility of their operations being used as a conduit for money laundering.
The key phrase here is “reasonable measures”. The regulators accept that it is highly unreasonable to expect anyone to design a system, which is completely foolproof in all situations, particularly given that modern criminal organizations can be highly sophisticated. They do, however, expect gambling operators to have robust systems in place to alert them to known indicators of potential money laundering and to be ready and willing to alert the relevant authorities if they suspect that criminals are operating through them. If a gambling operator can demonstrate that it has made its best, reasonable effort to prevent money laundering then it is far less likely to be sanctioned if it is determined that its systems have been (at least temporarily) fooled by criminals using an unconventional and/or sophisticated approach.
Gambling and casinos in the UK
Gambling is a very broad industry and covers everything from games of skill where players compete against each other (poker, fantasy sport, backgammon…) to games where they bet against the house on the outcome of real-world events (mostly sports matches) to games where the outcome is dictated by the laws of statistics and/or a computer algorithm (casino games).
Each of these categories carries a different level of risk with regard to the likelihood of it being exploited by criminals. Games of skill tend to carry the lowest risk and casino games by far the highest. This has been reflected in the application of the updated AML rules.
The UK government has taken advantage of the fact that the EU 4th Money Laundering Directive permits country-level governments to grant exemptions to this directive to parts of the gambling industry where there is “proven low risk posed by the nature and, where appropriate, the scale of operations of such services”.” and has actually exempted the majority of the gambling industry from the new rules, only casino operators will be impacted by them. Going forward, casino operators will find themselves operating under the aegis of the new Office for Professional Body Anti-Money Laundering Supervision (OPBAS), which will itself be integrated into the FCA and will take over the responsibilities of a diverse range of regulatory bodies currently managing different aspects of money-laundering prevention.
Having said all that, the basic rules of AML compliance remain the same as they have been for decades: stay up to date, stay vigilant and if you notice anything suspicious, report it.