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Prevention of money laundering and the financing of terrorism

Enhanced customer due diligence and enhanced ongoing monitoring

6.22 Casino operators must apply enhanced customer due diligence measures and enhanced ongoing monitoring, in addition to the required CDD measures, to manage and mitigate the money laundering or terrorist financing risks arising in the following cases:

  • in any case identified by the operator or in information provided by the Commission to the operator as one where there is a high risk of money laundering or terrorist financing 84
  • in any business relationship or transaction with a customer situated in a high-risk third country identified by the European Commission
  • if the operator has determined that a customer or potential customer is a PEP, or a family member or known close associate of a PEP
  • in any case where the operator discovers that a customer has provided false or stolen identification documentation or information and the operator proposes to continue to deal with the customer
  • in any case where a transaction is complex or unusually large, or there is an unusual pattern of transactions, and the transaction or transactions have no apparent economic or legal purpose
  • in any other case which, by its nature, can present a higher risk of money laundering or terrorist financing (regulation 33(1)). 

6.23 These enhanced measures:

  • must include:
    • examining the background and purpose of the transaction, as far as reasonably possible
    • increasing the degree and nature of monitoring of the business relationship in which the transaction is made, to determine whether the transaction or the relationship appear to be suspicious (regulation 33(4))
  • depending on the requirements of the case, may also include, among other things:
    • seeking additional independent, reliable sources to verify information provided or made available to the casino operator
    • taking additional measures to understand better the background, ownership and financial situation of the customer, and other parties to the transaction
    • taking further steps to be satisfied that the transaction is consistent with the purpose and intended nature of the business relationship
    • increasing the monitoring of the business relationship, including greater scrutiny of the transactions (regulation 33(5)).

6.24 When assessing whether there is a high risk of money laundering or terrorist financing in a particular situation, and the extent of the measures which should be taken to manage and mitigate the risk, casino operators must take account of the following risk factors, among other things:

  • whether:
    • the business relationship is conducted in unusual circumstances
    • the customer is resident in a geographical area of high risk
    • the product or transaction might favour anonymity
    • the situation involves non-face-to-face business relationships or transactions (as in the case of remote casinos), without certain safeguards such as electronic signatures (an electronic signature should be taken to mean data in electronic form which is attached to or logically associated with other data inelectronic form and which is used by the signatory to sign. Other safeguards mentioned by the European Supervisory Authorities intheir Joint Guidelines under Articles 17 and 18(4) of Directive (EU) 2015/849 are electronic identification certificates issued inaccordance with Regulation EU (No) 910/2014, and anti-impersonation fraud checks. If no safeguards are in place, non-face-to-facebusiness relationships or transactions must be considered to present a high risk of money laundering or terrorist financing.)
    • payments will be received from unknown or unassociated third parties of the customer
    • new products and new business practices are involved, including new delivery mechanisms, and the use of new or developing technologies (suchas virtual currencies) for both existing and new products
  • the business relationship or transaction involves countries:
    • identified by credible sources, such as mutual evaluations, detailed assessment reports or published follow-up reports, as not having effective systems to counter money laundering or terrorist financing
    • identified by credible sources as having significant levels of corruption orother criminal activity, such as money laundering, terrorism, and the production and supply of illicit drugs
    • subject to sanctions, embargoes or similar measures issued by, for example, the European Union or the United Nations
    • providing funding or support for terrorism
    • that have organisations operating within their territory which have been designated, by the government of the UK, as proscribed organisations under the Terrorist Act or, by other countries, international organisations or the European Union as terrorist organisations
    • identified by credible sources (such as evaluations, detailed assessment reports or follow-up reports published by FATF, the International Monetary Fund, the World Bank, the organisation for Economic Cooperation and Development or other international bodies or non-governmental organisations) as not implementing requirements to counter money laundering and terrorist financing that are consistent with the FATF recommendations (regulation 33(6)). 

6.25 The Commission recommends that casino operators also consider the following factors when assessing whether there is a high risk of money laundering or terrorist financing:

  • the customer transacts with significant amounts of cash
  • the customer provides false, forged or stolen identification documentation uponestablishing a business relationship
  • the customer transacts with multiple remote gambling operators, particularly wherethis occurs across multiple geographical areas
  • the product, service or transaction involves peer-to-peer gaming
  • the product is electronic roulette
  • the product, service or transaction involves Ticket In/Ticket Out (TITO) or similar technology (these factors are considered by the Commission in Money laundering and terrorist financing risk within the British gambling industry.) 

6.26 In assessing whether there is a high risk of money laundering or terrorist financing, casino operators must bear in mind that the presence of one or more of the risk factors listed above may not always indicate that there is a high risk in a particular situation (regulation 33(7)). 

Next chapter: Threshold approach