4 MLD New Regulations In The Gaming Industry
Gaming operators in the EU (and UK) are facing significant regulatory changes when the EU’s 4th Anti-Money Laundering Directive (4 MLD) comes into force on 26 June 2017.
The key requirements gaming operators must address before the June deadline are:
• To have a Money Laundering /Terrorism Financing (ML/TF) risk assessment in place,
• Implement more robust customer due diligence requirements – KYC is even more important for transactions of €2000 or more.
This directive expands the coverage of regulations to all gambling / gaming operators, not just casino operators; and makes specific reference to online gambling. Therefore all operators taking online payments need to take urgent steps now to comply, if they haven’t already.
The Cost of Non-Compliance
Of course, non-compliance comes at a price. Hefty fines are on the cards, with regulators like the UK Gambling Commission warning that voluntary settlements may not always be its preferred route. It is also likely that operators may have their operating licenses reviewed for severe or multiple breaches of AML compliance. Furthermore, Money Laundering Reporting Officers (MLRO) should also be aware that they may be personally fined for non-compliance.
Fines are not the only consequence of non-compliance. Reputational damage is a cost that is not always factored into the business case for compliance. Gaming operators will need to assess whether newspaper headlines trumpeting non-compliance across their front pages is good for business – as the financial services sector did a few years ago.
Low Risk Operators
How 4 MLD is translated in different EU states is another consideration for gaming operators. Governments in each EU member state have some flexibility to exempt proven low risk operators.
In the UK the government has decided to utilise these powers and exempt gambling sectors that are lower risk; apart from non-remote and remote casinos which cannot be exempted. This means no change to regulations for most gaming operators.
However for remote (and online) gaming operators this creates some challenges, with different EU states translating 4 MLD in different ways. There is also concern that some countries may decide to use 4 MLD to restrict cross-border gaming transactions.
What You Need To Do
Gaming operators must ensure that they understand how 4 MLD impacts on them. Both in their own country and in other EU states.
Steps must be taken now to comply with 4 MLD, where appropriate, such as reviewing screening tools and the process of on-boarding customers.
If you haven’t already, get in touch with your account manager at Secure Trading to find out how the changes affect your gaming activities. They will be able to offer advice on restructuring payment to align with the AML changes, and explore enhanced AML, fraud and compliance solutions.
Call +44 (0) 808 149 6295 or email [email protected]