The European Commission has given the threat of money laundering on online casinos its highest threat level. It is calling for the strongest anti-money laundering (AML) measures to discourage criminals.
The commission periodically assesses risks from money laundering and terrorist financing for its members states and across various industries. The 2022 edition is its third such assessment. The first two were in 2017 and 2019.
The commission said in a statement: “As with the previous reports, this third edition analyzes the present ML/TF risks and proposes comprehensive action to address them.” It added, “It also assesses the degree to which the Commission’s recommendations for mitigating measures in the 2019 report have been implemented and evaluates the remaining risks.”
The report highlighted gaming and found online gaming to be “very high” risk.
The report continued, “Despite several risk-based measures already being implemented by many EU online operators (for example anti-money laundering training sessions for employees, customer due diligence and ‘know your customer’ processes), the exposure to money laundering risks in online gambling is still rather high as it encompasses significant factors such as the non-face-to face element, huge and complex volumes of transactions and financial flows.”
Digital currencies make online gaming especially vulnerable to money laundering. “Although not based on cash, it is closely connected to the use of e-money, and digital and virtual currencies which, for example, also increases the degree of anonymity for customers,” said the commission.
While many markets and operators have self-regulated responsibly, there is no consistency among members, said the commission. “In many member states online gambling operators have developed a good level of self-regulation and risk assessment, although their cooperation with competent authorities and financial intelligence units could be improved,” said the statement. “Operators believe that they do not get clear guidance on how to properly address the risks considering, in particular, the lack of feedback from financial intelligence units on suspicious transaction reports.”
The commission urges a lower threshold for winnings subject to due diligence from the current €2,000. It also recommends that member states require online casinos to hold regular training sessions for staff and compliance officers, and urges that players should not be allowed to have multiple accounts.
The commission did, however, say that AML has improved for land-based casinos, falling from a “very high” vulnerability rating in 2019 to “medium” this year.
It commented, “Casinos are considered to be exposed to infiltration risks, although for casinos owned by the state or public companies, this level of risk is lower,” adding “Hence, the risk of casinos being exploited to money laundering appears high, and the level of the threat posed by money laundering to casinos is considered as moderately significant.”
The commission lists the risk of money laundering highest in poker and retail betting, but medium for lotteries and slot machines. It classes bingo as the lowest risk.
