DAML exemption provisions for the regulated sector
24 May 2024
As a result of The Economic Crime and Corporate Transparency Act 2023 (the ECCT) (opens in new tab), changes have been made to the defence against money laundering (DAML) process.
Background
Gambling operators and other businesses may be liable for one of the three principal money laundering offences under sections 327 to 329 of The Proceeds of Crime Act 2002 (POCA) (opens in new tab), where they deal in certain ways with criminal property.
Gambling operators and other businesses can avoid committing these offences by making an authorised disclosure (a DAML) to the National Crime Agency (the NCA) and receiving consent or deemed consent to proceed.
New DAML exemptions
The ECCT updated Part 7 of the POCA. Provisions under sections 182 and 183 of the ECCT are of particular relevance and apply to casinos (and other businesses in the regulated sectors). This exemption means that casinos will not need to submit a DAML, as follows.
Under section 182 of the ECCT, a new exemption was enacted under sections 327, 328 and 329 of POCA (the money laundering offences) which affects paying away funds under £1,000 when exiting a relationship with a customer, where there is knowledge or suspicion of money laundering or criminal property.
This means that, if a casino has knowledge or suspicion of criminal property, it can transfer money or other property owing or belonging to a customer for the purposes of exiting that customer relationship (without needing to submit a DAML), provided the value is less than £1,000 and any customer due diligence measures, as required under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the Money Laundering Regulations (MLRs 2017))(opens in new tab), have been completed before transferring or handing over the money or other property.
Under section 183 of the ECCT, there is also a new exemption for mixed property transactions under sections 327, s328 and s328 which enables casino operators to ring-fence funds they believe are criminal property and transact with funds outside of the ring-fenced funds.
Actions
In both circumstances, casino operators will still need to report their suspicions of money laundering to the NCA, but will not be required to obtain a DAML to avoid committing money laundering offences under POCA. The purpose of the change is to increase and improve efficiency of the DAML regime for law enforcement, businesses and consumers, by allowing them to focus their activities on criminal activity areas of high value.
The exemptions noted under sections 182 and 183 of the ECCT do not apply to gambling businesses outside the scope of The MLRs 2017, that is non-casino gambling operators. This means that non-casino gambling operators are still expected to submit DAMLs (where required) as these businesses are not covered by the exemptions.
Casinos should consider amending their policies, procedures and controls to reflect these changes, and may wish to obtain legal advice as to their responsibilities in this regard.
The Gambling Commission’s, ‘The prevention of money laundering and combating the financing of terrorism’ publication will be updated to reflect this change in due course.
Further information on these changes can be found in guidance published by the Home Office (opens in new tab).