European online gambling operators still face multiple anti-money laundering (AML) challenges across the continent, according to a Brussels-based trade association representing them.
Dr Ekaterina Hartmann, director of legal and regulatory affairs at the European Gaming and Betting Association (EGBA), said the industry suffers from a lack of sector-specific guidance regarding AML best practices, in particular for suspicious transactions reporting (STRs).
“Legislation is very important to provide a solid basis, but more tools are needed to effectively fight money laundering. Very few member states, apart from Estonia, Malta, and the Netherlands, provide detailed sector-specific guidance on how to conduct AML for the gambling sector,” Hartmann said.
The EGBA is close to finalising the first pan-European Anti-Money Laundering Guidelines specific to the online gambling sector.
The guidelines will aim to support online gambling operators in following the whole customer journey and will include practical guidance on topics such as the application of the risk-based approach, business risk assessment, customer due diligence and enhanced customer due diligence.
The guidelines will also aim to incorporate elements from the European Commission’s proposed updates to AML regulations before its entry into force, the trade group said.
The EGBA is also considering the possibility of allowing non-members to use the guidelines to fight money laundering more effectively across the entire sector.
The pan-European trade body counts many of the largest international operators among its ranks, including Entain, bet365, Flutter and Betsson, but its membership is currently limited to a small group of big firms.
The EGBA has cited a number of existing AML challenges for gambling companies, including the fact that STR forms are not standardised across the EU, something that the EGBA hopes the newly envisioned EU anti-money laundering authority will change.
When STRs are submitted, national financial intelligence units (FIUs) can at times provide a lack of feedback to gambling operators, which according to Hartmann prevents them from learning what data to provide and how to present it or how to better judge borderline cases.
Some FIUs require gambling operators to report any suspicious transaction, while other FIUs require certain criteria to be met before submitting an STR.
Compounding the difficulties faced by online operators is the “gold-plating” of AML rules by the EU member states, which means the powers of the EU directive governing it are extended when being transposed into national laws.
“Many of these rules render the EU’s risk-based approach to AML completely meaningless by effectively requiring enhanced due diligence for financial transactions which are many times smaller than the €2,000 threshold enshrined in the 4th AMLD,” Hartmann explained.
Some member states still require consumers to sign up to gambling platforms through in-person identification verification checks, a barrier Hartmann says would be “unthinkable” in any other sector.
The EU has included online gambling in its latest AML directives, which the EGBA says has led to more harmonisation for the sector, but did not achieve parity as the 4th Anti-Money Laundering Directive (4th AMLD) was not applied consistently.
The EGBA supports that online gambling will be covered by the EU’s upcoming AML regulation that will harmonise rules in a stronger way because they will be directly applicable as opposed to just being a directive.
This means that member states will have no room for divergent national interpretation of the EU rules and there will be uniform, horizontal AML rules throughout the bloc, the group said.
“Overall, the inclusion of gambling in the EU AML directives has had many positive effects on the fight against money laundering in our sector,” Hartmann said.
Earlier this week, Gibraltar was added to the Financial Action Task Force's (FATF) greylist with lenient punishment and lax oversight of gambling companies cited as key reasons, while fellow gambling licensing hub Malta was removed after officials cited improvements in its AML standards.