Developments in Anti-Money Laundering

Developments in Anti-Money Laundering

Money laundering

by Francesca Burnett-Hall, Associate

by Francesca Burnett-Hall, Associate

Many businesses are vulnerable to money launderers and those involved in terrorist financing. The current Third Money Laundering Directive applies to a number of sectors, but within the gambling sector, only casinos are subject to its terms.

The Fourth Money Laundering Directive (“4MLD”) which must be implemented by 26 June 2017, is intended to apply to the entire gambling sector. However, there is scope within 4MLD for EU Member States to be permitted to exempt certain gambling services – not including casinos – from some or all of the requirements in 4MLD, where those services are proven to be “low risk”.

DCMS is currently consulting on the transposition of 4MLD into UK law and is seeking views on the money laundering and terrorist financing risks in relation to the following sectors of the gambling industry, and the different gambling services offered by these sectors:

• betting (including on-course and off-course bookmakers)
• the remote sector (including betting, bingo, casino and/or lotteries, where offered through remote means)
• bingo
• adult gaming centres
• lotteries (including the national lottery)
• pubs and clubs that offer gaming machines.

Responses to the consultation must be submitted by 23:45 on Thursday 10 November 2016. The government will assess the evidence provided and will exempt only those gambling providers which are proven to be low risk. Providers of gambling services that do not benefit from the exemption will need to apply customer due diligence measures as follows:

• when establishing a business relationship;
• upon the collection of winnings or the wagering of stake (including by the purchase and exchange of gambling chips), or both, and when any transaction amounts to £1,672 (€2,000) or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked;
• where there is a suspicion of money laundering or terrorist financing, regardless of any derogation, exemption of threshold; or
• when there are doubts about the accuracy or adequacy of previously obtained customer identification information.

We do not expect the remote sector to be exempted, but it is not inconceivable that the Government may consider adult gaming centres, bingo and pubs and clubs offering gaming machines to be sufficiently low risk to exempt them from the requirements of 4MLD.

Meanwhile, the National Crime Agency has released a communication note providing further information on the new Suspicious Activity Report (“SAR”) glossary codes, which from 1 October 2016, are the only valid codes which can be used when submitting a SAR. The updated glossary code guidance booklet is available here.