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Casinos: Prevention of money laundering

Download Prevention of money laundering and combating the financing of terrorism guidance for remote and non-remote casinos in full.

Principles to be followed

All casinos (both premises based and remote) must have appropriate systems and processes to prevent money laundering and terrorist financing. To achieve this, as an operator, you should:

  • develop systems and controls that are appropriate for your businesses
  • adopt a risk-based approach that is flexible, effective, proportionate and cost-effective
  • have full commitment from, and responsibility resting with, senior management
  • regularly assess the adequacy of your systems and controls
  • maintain, where necessary, records of customers and transactions that meet the needs of law enforcement investigations tackling money laundering and terrorist financing
  • provide initial and ongoing training for all relevant employees
  • support your nominated officers with resources and authority to operate objectively and independently
  • engage with law enforcement bodies and the Gambling Commission in relation to suspicious activity
  • participate in feedback and best practice forums.

Risk-based approach

The Money Laundering Regulations (the Regulations) require you to have a policy and procedure in relation to risk assessment and management. The risk-based approach involves a number of discrete steps in assessing the most proportionate way to manage and mitigate the money laundering and terrorist financing risks you face. These steps require you to:

  • identify the money laundering and terrorist financing risks that are relevant to your business
  • design and implement policies and procedures to manage and mitigate these assessed risks
  • monitor and improve the effective operation of these controls
  • record what has been done, and why.

A risk-based approach focuses the effort where it is most needed and will have most impact. It requires the full commitment and support of senior management, and the active co-operation of all employees.

Senior management responsibility

Senior management must be fully engaged in the processes around your assessment of risks for money laundering and terrorist financing. They must be involved at every level of the decision making to develop your policies and processes to comply with the Regulations. Disregard for the legal requirements, for example, turning a blind eye to customers spending criminal proceeds, may result in criminal or regulatory action.

A member of senior management who consents to, or connives in, the commission of offences under the Regulations, or where the commission of any such offence is attributable to any neglect on his part, will be individually liable for the offence.

You must establish and maintain appropriate written risk-sensitive policies and procedures relating to:

  • customer due diligence (CDD) measures and ongoing monitoring
  • reporting
  • record keeping
  • internal control
  • risk assessment and management
  • training
  • the monitoring, management and internal communication of policies and procedures.

Nominated officer

Nominated officers have responsibility for:

  • making reports to senior management on anti-money laundering and countering terrorist financing activity
  • receiving internal disclosures under Part 7 of the Proceeds of Crime Act 2002 and Part III of the Terrorism Act 2000 deciding whether these should be reported to the National Crime Agency
  • if appropriate, making such external reports.

They must have the authority to act independently in carrying out their responsibilities and have access to sufficient resources to carry out their duties.

Casinos must have contingency arrangements in place for circumstances where no nominated officer is in post, for example, if on annual leave, long-term sick leave or if the nominated officer leaves the employ of the casino.

Casino employees

Employees must report to their nominated officer any knowledge or suspicion of money laundering whether by customers, guests or other employees.

Employees must follow casino policies and procedures for:

  • customer due diligence, including enhanced requirements for high risk customers, which includes politically exposed persons
  • ongoing monitoring, including enhanced requirements for high risk customers
  • reporting suspicious activity to the nominated officer
  • where necessary, seeking appropriate consent to allow participation in gaming and to conduct gaming and other business transactions
  • record keeping for those who exceed the threshold or who have a business relationship.

Customer due diligence

A key requirement in the Regulations is the requirement to make checks on customers. You can use one of two approaches; identifying and verifying the identity of all customers on entry to the casino’s licensed premises (the on-entry approach) or undertaking identification and verification when a customer approaches the threshold set out in the Regulations (the threshold approach).

You must conduct your customer due diligence on the basis of risk assessment, including simplified due diligence and enhanced due diligence (which includes politically exposed persons). You are also required to identify the beneficial owner and need to have evidence of identity in place for all customers.

Customer due diligence is ongoing and may need updating for changes in the customer’s circumstances and personal details.

Record keeping

The purpose of the record keeping requirement is to ensure that there is an audit trail that could assist in any financial investigation by a law enforcement body.

Your record keeping policy and procedure should cover:

  • details of how compliance has been monitored by the nominated officer
  • delegation of AML/CTF tasks by the nominated officer
  • nominated officer reports to senior management
  • information not acted upon by the nominated officer, with reasoning why no further action was taken
  • customer identification and verification information
  • supporting records in respect of business relationships or occasional transactions
  • employee training records
  • internal and external suspicious activity reports
  • contact between the nominated officer and law enforcement or the NCA, including records connected to appropriate consent.

Suspicious activity reports

Employees in casinos are required to make a report in respect of information that comes to them within the course of business:

  • where they know
  • where they suspect
  • where they have reasonable grounds for knowing or suspecting

...that a person is engaged in money laundering or terrorist financing.

You must ensure that any employee reports to the nominated officer where they have grounds for knowledge or suspicion that a person is engaged in money laundering or terrorist financing. Your nominated officer must consider each report, and determine whether it gives grounds for knowledge or suspicion.

If the nominated officer determines that a report does give rise to grounds for knowledge or suspicion, they must report the matter to the NCA. Under the Proceeds of Crime Act 2002, the nominated officer is required to make a report to the NCA as soon as is practicable if they have grounds for suspicion that another person, whether or not a customer, is engaged in money laundering. Under the Terrorism Act, similar conditions apply in relation to disclosure where there are grounds for suspicion of terrorist financing.

Offences

Proceeds of Crime Act 2002 and the Terrorism Act create offences of failing to report suspicious activity. Where a person fails to comply with the obligations to make disclosures to a nominated officer, or the nominated officer to the NCA, as soon as practicable after the information giving rise to the knowledge or suspicion comes to the employee, they are open to criminal prosecution.

In certain circumstances, a person also commits an offence if they disclose that a SAR has been submitted or disclose that an investigation is underway.

A person in the regulated sector also commits an offence if they falsify, conceal, destroy or dispose of, or causes or permits the falsification, concealment, destruction or disposal of, documents which are relevant to the investigation.