AML & RG
1AMLD also introduced obligations in relation to Customer Due Diligence (CDD) and Know Your Client (KYC). Member States were required to pass legislation which placed those public and private institutions and individuals deemed gatekeepers of the financial system under certain obligations. These obligated entities were to adopt procedures by means of which they onboard and accept clients, and also to monitor the activities of clients after onboarding to establish whether any suspicious transactions were being executed. Obligated entities were limited under 1AMLD predominantly to banks but it was later established that this was too limited as money laundering was a risk in a wide variety of sectors and business outside of the core financial industry. 2AMLD, introduced in 2001, widened the scope of obligated entities to include non-bank financial institutions and law y ers, but it was not until the introduction of 3AMLD in 2005 that accountants, tax advisors, notaries and (land based) casinos were also included. The broadening of scope to cover casinos established a direct regulatory connection between AML and the gambling industry. As well as covering the combatting of terrorism financing for the first time, 3AMLD also further expanded AML obligations to further sectors, such as collective investment undertakings and branches of financial institutions in the EU, regardless of whether their head office was in the EU. Furthermore, 3AMLD introduced variations to the application of CDD in light of the risk profile of the client, product, or other relevant factors. Simplified CDD would be allowed for lower risk situations and enhanced CDD for high(er) risk situations. The directive did not define these higher or lower risk factors as these were to be outlined by other publications of the European Commission. These have been relatively minimal to date. Only publications by the Financial Action Task Force (FATF) have provided additional guidance in this respect. Since 3AMLD however, the European Commission has published regular lists of non- cooperative third countries with which are considered higher risk. Many of the lower and higher risk criteria have been established through policies and procedures and industry standards, in themselves heavily impacted by publications of, amongst others, the FATF and sanction policies. The EU AML framework evolved with the introduction of 4AMLD in 2015, 5AMLD a year later and 6AMLD in 2018. All of these AML directives have to be implemented in local legislation by the EU member states. For this article these
directives, although relevant on their own merits, are deemed further enhancement of the AML regime and the scope and definitions the EU wishes to establish in member states.
Similar but different Turning now to Responsible Gambling (RG), these are also a vital set of responsibilities for operators and are, like AML legislation, organized at a member state level. Despite this the European Commission did in 2014 feel it important to issue a non-binding advisory document specific to online gambling. Like AML the aim of the recommendation was to move towards common standards and measures regarding player identification, prevention of underage gambling and social responsibility. The recommendations were updated and evaluated in both 2018 and 2021 and it was established that their primary objective was not being achieved. 2021 showed improvements compared to 2018 although these improvements are likely to be the consequence of regulatory evolution with no real link back to the 2014 recommendations. A non-binding RG advisory document is clearly less effective than the various directives that have been issued in relation to AML. Both RG and AML legislation in member states are guided by the principles of social responsibility; it is deemed that both society as well as individual players should be protected from wrongdoing as the social impact of such wrongdoing is considered substantial. From an AML perspective the reputation of the financial system is deemed critical whilst from an RG perspective personal (financial) health and the wider impact on society are considered in the context of consumer protection. However, even though they are connected through the link to social responsibility, jurisdictions have safeguarded both principals in different laws. The RG requirements are generally addressed within specific gambling laws, including both land-based and online gambling, whilst the AML requirements are generally incorporated in laws that regulate the financial and corporate services industry. Another element that connects AML and RG requirements is the need to gather, analyze, monitor and store information in relation to players. From an RG perspective players are also referred to as customers, whilst under AML they are termed clients. The information required from players from an RG
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IMGL MAGAZINE | JANUARY 2023
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