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  3. The prevention of money laundering and combating the financing of terrorism

Guidance

The prevention of money laundering and combating the financing of terrorism

Gambling Commission guidance for remote and non-remote casinos: Fifth edition (Revision 3).

Published
13 November 2020

Last updated
28 September 2023 - Changes

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  1. Contents
  2. Part 6 - Customer due diligence
  3. 7 - Enhanced customer due diligence and enhanced ongoing monitoring

7 - Enhanced customer due diligence and enhanced ongoing monitoring

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 financing96
  • in any business relationship with a customer situated in a high-risk third country or in relation to any transaction in relation to which the operator is required to apply CDD measures97 , where either of the parties to the transaction is resident98 in a high-risk third country99
  • 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, or 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.100

In the case of business relationships with customers situated in high-risk third countries or transactions where either of the parties to the transaction are resident in a high-risk third country, the enhanced measures undertaken must include:

  • obtaining additional information on the customer and on the customer’s beneficial owner
  • obtaining additional information on the intended nature of the business relationship
  • obtaining information on the source of funds and source of wealth of the customer and of the customer’s beneficial owner
  • obtaining information on the reasons for the transactions
  • obtaining approval of senior management for establishing or continuing the business relationship
  • conducting enhanced monitoring of the business relationship by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination.101
  • as far as reasonably possible, examining the background and purpose of the transaction
  • increasing the degree and nature of monitoring of the business relationship in which the transaction is made, to determine whether the transaction or relationship appear to be suspicious.102

Depending on the requirements of the case, the enhanced measures undertaken in any case listed in enhanced customer due diligence and enhanced ongoing monitoring 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.103

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 customer is the beneficiary of a life insurance policy
  • the customer is a third country national who is applying for residence rights in or citizenship of an EEA state in exchange for transfers of capital, purchase of a property, government bonds or investment in corporate entities in that EEA state
  • 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 an electronic identification process which meets the verification requirements104
  • 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 (such as virtual currencies) for both existing and new products.

In addition whether 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 or other 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 Terrorism Act (opens in a new tab) 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.105

Recommendation

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 upon establishing a business relationship
  • the customer transacts with multiple remote gambling operators, particularly where this 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.106

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 may not always indicate that there is a high risk in a particular situation.107

References

96A key source of information provided by the Commission in relation to where there is a high risk of money laundering or terrorist financing is Money laundering and terrorist financing risk within the British gambling industry. This risk assessment is updated annually and is available on the Gambling Commission website.
97Regulation 33(3)(b).
98Regulation 33(3)(c).
99A high-risk third country is a country which is identified as a high-risk third country (regulation 33(3)(a)). These high-risk third countries are listed in Schedule 3ZA (high-risk third countries) to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (opens in new tab). This list is updated and amended periodically.
100Regulation 33(1).
101Regulation 33(3A).
102Regulation 33(4).
103Regulation 33(5).
104Other safeguards mentioned by the European Supervisory Authorities in their Joint Guidelines under Articles 17 and 18(4) of Directive (EU) 2015/849 are electronic identification certificates issued in accordance with Regulation EU (No) 910/2014, and anti-impersonation fraud checks. If no safeguards are in place, non-face-to-face business relationships or transactions must be considered to present a high risk of money laundering or terrorist financing.
105Regulation 33(6).
106 These factors are considered by the Commission in Money laundering and terrorist financing risk within the British gambling industry.
107Regulation 33(7).

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