The prevention of money laundering and combating the financing of terrorism

Introduction

1 Introduction

The law concerning money laundering is based on the general and wide-ranging prevention and detection of the use of any proceeds of crime, and the prevention and detection of terrorist financing and proliferation financing. For some businesses (including casinos) this includes the more specific requirements of the business and its employees to have policies, procedures and controls in place covering the risks they face from money laundering and terrorist financing.

Using money in casinos, regardless of the amount, that is the proceeds of any crime can amount to money laundering if the person using or taking the money knows or suspects that it is the proceeds of crime. Money laundering offences can be committed by both the customer and casino employees, depending on their respective levels of knowledge or suspicion.

What is meant by the proceeds of crime and money laundering?

Broadly, the terms 'proceeds of crime' or 'criminal proceeds' refer to all property which a person benefits from by being party to criminal conduct, either directly or indirectly.

It also includes property that a person gains by spending the proceeds of criminal conduct. For example, if a person uses money earned from drug dealing to buy a car or a house, or spends money gained in a bank robbery to gamble.

The term money laundering is often misunderstood

It is defined in section 340 of the Proceeds of Crime Act 2002 (POCA) (opens in new tab). It covers a wide range of circumstances, involving any activity concerning the proceeds of any crime.

For example, this may include:

• trying to turn money raised through criminal activity into 'clean' money (classic money laundering)
• possessing or transferring the benefit of acquisitive crimes such as theft and fraud, and funds generated from crimes like tax evasion (this includes the possession by an offender of the proceeds of their own criminal activity)
• possessing or transferring stolen goods
• being directly involved with any criminal or terrorist property, or entering into arrangements to facilitate the laundering of criminal or terrorist property
• criminals investing the proceeds of their crimes in the whole range of financial products.

Classic money laundering usually consists of the following stages:

There is potential for the money launderer to use gambling at every stage of the process

The land-based gambling industry is particularly vulnerable during the placement stage, as cash is widely used. The remote gambling industry may seem less vulnerable as electronic transfers are required for placements. However, identity theft and identity fraud can enable the money launderer to move criminal proceeds anonymously. The use of multiple internet transactions can also facilitate the layering stage of money laundering.

Casino operators should be mindful that the offence of money laundering also includes simple criminal spend (the use of criminal proceeds to fund gambling as a leisure activity). It may not include all the typical stages of the laundering process, if any at all.

2 Legal background

The Financial Action Task Force (FATF) Recommendations

The Financial Action Task Force (FATF) is the inter-governmental body responsible for setting the international standards for anti-money laundering (AML), countering terrorist financing (CTF) and proliferation financing.

They issue recommendations which member countries should implement in order to combat money laundering and terrorist financing. These recommendations are implemented by over 190 countries.

The FATF Recommendations (opens in new tab) set out the essential measures that countries should have in place to:

• identify the risks, develop policies and provide domestic coordination
• pursue money laundering, terrorist financing and the financing of proliferation
• apply preventative measures for the financial and other designated sectors
• establish powers and responsibilities for competent authorities and implement other institutional measures
• enhance the transparency and availability of beneficial ownership information of legal persons and arrangements
• facilitate international cooperation.

The Proceeds of Crime Act (POCA)

Criminal offences of money laundering were first introduced in the United Kingdom in the Criminal Justice Act 1988 (opens in new tab) and the Drug Trafficking Offences Act 1986 (opens in new tab).

POCA consolidated, updated and reformed the criminal law relating to money laundering to include any dealing in 'criminal property', which is defined widely as the proceeds of any type of crime, however small the amount.

The principal offences criminalise any involvement in the proceeds of any crime if the person knows or suspects that the property is criminal property.³

These offences relate to the concealing, disguising, converting, transferring, acquisition, use and possession of criminal property, as well as an arrangement which facilitates the acquisition, retention, use or control of criminal property.

Concealing or disguising property includes concealing or disguising its:

• nature
• source
• location
• disposition
• movement or ownership
• or any rights with respect to it.

Whilst 'converting' criminal property is not defined in POCA, it is suggested that this be given its conventional legal meaning, that is that the 'converter' has dealt with the property in a manner inconsistent with the rights of the true owner of the property. For example, a criminal steals cash in a bank robbery and then uses that cash to open a gambling account and gamble.

Section 328 of POCA (opens in a new tab), provides that a person commits an offence if they enter into or become concerned in an arrangement which they know or suspect facilitates, by whatever means, the acquisition, retention, use or control of criminal property by or on behalf of another person.

Acquisition, use and possession under section 329(1) (opens in a new tab) includes, for example, when a person carries, holds or looks after criminal property or acquires criminal property for 'inadequate consideration'. This means when a person buys or exchanges something which is significantly below market value (inadequate consideration). However, a person does not commit such an offence if they acquired or used or had possession of the property for adequate consideration.⁴

The principal money laundering offences are wide and can be committed by any person. For example, a casino employee who has knowledge or suspicion that a customer is using the proceeds of crime, or has possession of the proceeds of criminal activity.

The offence of money laundering and the duty to report under POCA apply in relation to the proceeds of any criminal activity, wherever conducted, including abroad, that would constitute an offence if it took place in the UK. However, a person does not commit an offence of money laundering where it is known or believed, on reasonable grounds, that the relevant criminal conduct occurred outside the United Kingdom and the relevant conduct was not criminal in the country where it took place and is not of a description prescribed by an order made by the Secretary of State.⁵

The money laundering offences assume that a criminal offence has occurred in order to generate the criminal property which is now being laundered. This is often known as a predicate offence. No conviction for the predicate offence is necessary for a person to be prosecuted for a money laundering offence.⁶

In addition, POCA contains provisions for the recovery of the proceeds of crime and forfeiture can be granted, regardless of whether a conviction for any offence has been obtained or is intended to be obtained. Under certain circumstances, criminal property can be recoverable even if it is disposed of to another person.⁸

The Terrorism Act

The Terrorism Act 2000 (the Terrorism Act) (opens in a new tab) establishes several offences about engaging in or facilitating terrorism, as well as raising or possessing funds for terrorist purposes. It establishes a list of proscribed organisations that are believed to be involved in terrorism. In December 2007, tipping off offences and defences to the principal terrorist property offences were introduced.⁹

The Terrorism Act applies to all persons and includes obligations to report suspected terrorist financing. The offences of failing to disclose and tipping off are specific to people working in firms covered by the Money Laundering Regulations (the Regulations), and who are therefore in the regulated sector, which includes casinos.

The Money Laundering Regulations

The Regulations¹⁰ represent the UK's response to the FATF Recommendations and implement the law in the UK on this topic. They set requirements for the AML and CTF regime within the regulated sector, which includes casinos.

The Regulations apply to non-remote and remote casinos, licensed by the Commission, who act in the course of business carried on by them in the UK.

This includes remote casinos which either:

• have at least one piece of remote gambling equipment situated in Great Britain
• do not have remote gambling equipment situated in Great Britain, but the gambling facilities provided by remote casino are used in Great Britain.¹¹

This guidance sets out how casino operators must and can comply with the law governing money laundering, terrorist financing and proliferation financing. The law places responsibilities on the Commission as the supervisory authority for casinos. The Commission should produce guidance that helps casino operators to meet the requirements of the law, is workable in the remote and non-remote casino environments and is approved by HM Treasury. This guidance, therefore, covers the full requirements of the UK law as it affects casinos.

---

³ Sections 327 (opens in a new tab), 328 (opens in a new tab) and 329 (opens in a new tab) of the Proceeds of Crime Act.
⁴ Section 329(2)(c) of POCA (opens in a new tab).
⁵ Sections 327(2A) (opens in a new tab), 328(3) (opens in a new tab) and 329(2A) (opens in a new tab) of POCA.
⁶ Following the decision in relation to R v Anwoir (2008) 2 Cr. App. R. 36, the Prosecution does not need to prove a specific criminal offence, but can instead show that it derived from conduct of a specific kind or kinds and that conduct of that kind or those kinds was unlawful, and by evidence of the circumstances in which the property had been handled, which were such as to give rise to the irresistible inference that it could only have been derived from crime.
⁷ Section 334 (opens in a new tab) of POCA.
⁸ Section 304 (opens in a new tab) of POCA.
⁹ Introduced by the Terrorism Act 2000 and Proceeds of Crime Act 2002 (Amendment) Regulations 2007.
¹⁰ The current regulations (The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017) came into effect on 26 June 2017 and implemented the 4th EU Anti-Money Laundering Directive. Amending Regulations implementing the 5th EU Anti-Money Laundering Directive were promulgated in January 2020. The United Kingdom’s exit from the European Union has does not have a substantive impact on the Regulations.
¹¹ Regulations 8 and 9.

3 The role of gambling operators

Operators have a responsibility to uphold the three licensing objectives set out in the Gambling Act 2005 (the Act) (opens in a new tab). The first of those licensing objectives is to prevent gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime.

As described previously, money laundering in the gambling sector takes two main forms:

1. Exchanging money, assets, goods and property that were acquired criminally for money or assets that appear to be legitimate or 'clean' - so called classic money laundering). This is frequently achieved by transferring or passing the funds through some form of legitimate business transaction or structure.
2. The use of criminal proceeds to fund gambling as a leisure activity - so called criminal or 'lifestyle' spend.

In order to avoid committing offences under POCA, operators should report instances of known or suspected money laundering or terrorist financing by customers to the National Crime Agency (opens in a new tab) (the NCA) and, where a defence (appropriate consent) is requested, wait for such defence (consent) to deal with a transaction or an arrangement involving the customer, or wait until a set period has elapsed before proceeding.

Operators should be aware that there is no minimum financial threshold for the management and reporting of known or suspected money laundering or terrorist financing activity.

4 The role of the Gambling Commission

The Commission requires operators to prevent gambling being a source of crime or disorder, being associated with crime or disorder or being used to support crime. This guidance document is an important frame of reference to help casino operators meet that objective.

Whilst potential breaches of POCA and the Terrorism Act (opens in a new tab) will normally be reported to the NCA and fall to the police to investigate, the Commission, in its role as the gambling regulator, seeks assurance that risks to the licensing objectives posed by money laundering activity and terrorist financing are effectively managed, and this guidance will assist casino operators to meet their obligations under POCA, the Regulations and the Terrorism Act (opens in a new tab), where appropriate.

The Regulations¹³ stipulate that a supervisory authority must:

• effectively monitor the relevant persons for which it is the supervisory authority and take necessary measures for the purpose of securing compliance by such persons with the requirements of the Regulations
• adopt a risk-based approach to the exercise of its supervisory functions, having identified and assessed the risks of money laundering and terrorist financing to which the relevant persons for which it is the supervisory authority are subject
• ensure that its employees and officers have access to relevant information on the risks of money laundering and terrorist financing which affect its sector
• base the frequency and intensity of its on-site and off-site supervision on the risk profiles it has prepared
• keep a record in writing of the actions it has taken in the course of its supervision and of its reasons for deciding not to act in a particular case
• take effective measures to encourage its sector to report breaches of the provisions of the Regulations to it¹⁴

In accordance with its risk-based approach, the supervisory authority must take appropriate measures to review:

• the risk assessments carried out by relevant persons to identify and assess the risks of money laundering and terrorist financing to which the business is subject
• the adequacy of the policies, procedures and controls adopted by the relevant persons and the way that those policies, procedures and controls have been implemented.¹⁵

The Commission therefore adopts a risk-based approach to its role as supervisory authority. We focus our attention on circumstances where the processing of criminal funds or criminal spend indicates serious failures in an operator’s arrangements for the management of risk and compliance with POCA, the Regulations and the Terrorism Act (opens in a new tab) or a breach of a licence condition, or makes a reasonably significant contribution to the financial performance of the business, particularly concerning their continued suitability to hold a licence.¹⁶

Where a casino operator fails to uphold the licensing objectives, for example by being ineffective in applying AML or CTF controls or ignoring their responsibilities under POCA, the Regulations and the Terrorism Act (opens in a new tab), or breaches an applicable licence condition, the Commission will consider reviewing the operating licence under section 116 (opens in a new tab) of the Act.

Certain activities carried out by casinos in respect of the services they offer to customers are categorised as money service business (MSB) activities. By acting as a cheque casher or currency exchange, accepting winners’ cheques and foreign currency, or transmitting money, casinos are subject to registration with, and supervision by, HM Revenue and Customs (HMRC). The exemptions that remove this requirement, where the MSB activities are occasional or very limited, do not apply to casinos because of the value of the transactions typically involved. However, in order to avoid dual regulation, and as provided by the Regulations¹⁷ there is an agreement between HMRC and the Commission that the Commission performs the supervisory role for the MSB activities in question. This means that it is not necessary for non-remote casinos to register with HMRC in this regard. Casinos should however note that, in its capacities as a supervisory authority and a law enforcement authority, HMRC may use the UK AML regime to gather information for tax purposes.¹⁸

---

¹² Regulation 7(1)(d).
¹³ Regulation 46(1) and (2).
¹⁴ This requirement is implemented through licence condition 15.2.3(1).
¹⁵ Regulation 46(4).
¹⁶ The public statements are available on the Gambling Commission website (opens in new tab).
¹⁷Regulation 7(2) and (3).
¹⁸Regulations 3 and 44 define HMRC as a law enforcement authority for the purposes of the Regulations. Regulation 52 allows supervisory authorities to disclose AML information to law enforcement authorities to fulfil the law enforcement authorities' functions, which, in the case of HMRC, includes collecting information for tax purposes. There are also obligations at regulations 21, 43-45, 49-50, 52, 63 and 64 in respect of law enforcement authorities, which broadly require relevant persons to respond to certain enquiries from law enforcement authorities and to provide information, and for law enforcement authorities and supervisors to cooperate and share information.

5 Purpose of the guidance

All gambling operators have a responsibility to keep financial crime out of gambling. POCA places an obligation on gambling operators to be alert to attempts by customers to gamble money acquired unlawfully, either to obtain legitimate or 'clean' money in return (and, in doing so, attempting to disguise the criminal source of the funds) or simply using criminal proceeds to fund gambling. Both modes of operation are described as money laundering.

This guidance sets out what is expected of casino operators and their employees in relation to the prevention of money laundering, terrorist financing and proliferation financing, but allows them some discretion as to how they apply the requirements of the AML or CTF regime in the particular circumstances of their business. It will be of direct relevance to senior management and nominated officers in remote and non-remote casinos.

While the guidance focuses primarily on the relationship between casino operators and their customers, and the money laundering risks presented by transactions with customers, operators should also give due consideration to the money laundering risks posed by their business-to-business relationships, including any third parties they contract with.¹⁹

---

¹⁹ Attention is drawn to risk assessment and code provision 1.1.2.

6 How should the guidance be used?

The purpose is to give guidance to those who set casino operators’ risk management policies, procedures and controls for preventing money laundering, terrorist financing and proliferation financing. The guidance aims to assist casino operators with detail about how to comply with the Regulations and the wider legal requirements, and is intended to allow operators flexibility as to how they comply. Casino operators will need to establish more detailed and more specific internal arrangements directed by senior management and nominated officers to reflect the risk profile of their business.

This guidance is not intended to be a substitute for legal advice and nothing in this document should be construed as such. Anyone requiring clarification on the legal issues contained in this document should seek their own independent legal advice. Neither is this document a substitute for casino operators’ individual risk management plans. Casino operators should refer to the Regulations and associated legislation in making decisions in relation to the Regulations.

The examples used throughout are for illustrative purposes only. The references to legislation and case law are accurate at the time of writing, but these may be subject to repeal or amendment.

7 Content of the guidance

In this guidance, the word 'must' denotes a legal obligation, while the word 'should' is a recommendation of good practice, and is the standard that the Commission expects casino operators to adopt and evidence. The Commission will expect casino operators to be able to explain the reasons for any departures from that standard.

The guidance emphasises the responsibility of senior management to manage the casino operator’s money laundering, terrorist financing and proliferation financing risks, and how this should be carried out on a risk-based approach. It sets out a standard approach to the identification of customers and verification of their identities, separating out basic identity from other measures relating to customer due diligence (CDD), including the obligation to monitor customer activity.

It is accepted that a proportionate risk-based approach must meet a variety of scenarios and, as such, must be based on an understanding of how the business is designed to operate. There is, therefore, a need for ongoing and repeated assessments of risk to meet changing circumstances.

8 Status of the guidance

POCA requires a court to take account of industry guidance, such as this, that has been approved by a Treasury minister when considering whether a person within the regulated sector has committed the offence of failing to report. Similarly, the Terrorism Act (opens in a new tab) requires a court to take account of such approved industry guidance when considering whether a person has failed to report under that Act²⁰. The Regulations require that a court must consider whether someone has followed this guidance if they are prosecuted for failing to comply with the Regulations.²¹

Casino operators must be able to demonstrate that they have taken all reasonable steps to comply with all the AML requirements. If they can demonstrate to a either a court, the Commission or both, that they have followed this guidance, then the court or the Commission is obliged to take that into account.

While the Commission is not a 'designated supervisory authority' under the Regulations²² an ordinary code provision²³ within the licence conditions and codes of practice requires casino operators to act in accordance with this guidance.

The Commission and other agencies or authorities that have the appropriate authorisation under POCA in England and Wales²⁴ can, in certain circumstances, apply for orders and warrants in relation to money laundering, for the purpose of, for example:

• requiring a specified person to produce certain material
• permitting the search of and seizure of material from specified premises
• requiring a financial institution to provide customer information relating to a specified person.

The guidance provides a sound basis for casino operators to meet their statutory and regulatory obligations when tailored by operators to their particular business risk profile. Departures from this guidance, and the grounds for doing so, should be documented and may have to be justified to, amongst others, the Commission.

---

²⁰ Section 21(A)6 (opens in a new tab) of the Terrorism Act.
²¹ Sections 330 (opens in a new tab) and 331 (opens in a new tab) of POCA, section 21(6) (opens in a new tab) of the Terrorism Act and Regulation 86(2).
²² Regulation 76.
²³ Ordinary code provision 2.1.1.
²⁴ See The Proceeds of Crime Act 2002 (References to Financial Investigators) (England and Wales) Order 2015 (Statutory Instrument No. 2015/1853) (opens in a new tab), as amended.

9 Licence conditions and codes of practice

Casino operators are required to comply with the applicable licence conditions and codes of practice²⁵ and should read this guidance in conjunction with the conditions and codes. Should casino operators breach the licence conditions or not follow the code provisions, the Commission may consider reviewing the operating licence in accordance with section 116 (opens in a new tab) of the Act. This could result in the suspension or revocation of the operator’s licence under sections 118 (opens in a new tab) and 119 (opens in a new tab) of the Act. The Commission may also consider imposing a financial penalty where we think that a licence condition has been breached, in accordance with section 121 (opens in a new tab) of the Act.

Operators should take note of the following licence conditions and codes of practice

Licence condition 12.1.1

This requires operators to:

• conduct an assessment of the risks of their business being used for money laundering and terrorist financing²⁶
• have appropriate policies, procedures and controls to prevent money laundering and terrorist financing²⁷
• ensure that such policies, procedures and controls are implemented effectively, kept under review, revised appropriately to ensure that they remain effective, and take into account any applicable learning or guidelines published by the Gambling Commission from time to time.

Licence condition 12.1.2

This requires operators based in foreign jurisdictions to comply with Parts 2 and 3 of the Regulations.

Licence condition 15.2.1(4)(c)

This requires operators to report the appointment of a person to a position where the holder of which has overall responsibility for the licensee’s AML or CTF compliance and/or for the reporting of known or suspected money laundering or terrorist financing activity.

Licence condition 15.2.2(1d)

This requires operators to report any actual or potential breaches by the licensee of the requirements imposed by or under Parts 7 (opens in a new tab) or Part 8 (opens in a new tab) of the Proceeds of Crime Act 2002, or Part 3 (opens in a new tab) of the Terrorism Act (opens in a new tab).

Licence condition 15.2.3

This requires operators to report:

• any actual or potential breaches by the licensee of the provisions of the Regulations
• the appointment, replacement, departure or removal of the officer responsible for the licensee’s compliance with the Regulations or the nominated officer.

Ordinary code provision 2.1.1

This requires operators to take into account the Commission’s guidance on anti-money laundering.

---

²⁵ Read the Licence conditions and codes of practice.<
²⁶ This must be done in writing, see what casino operators must do for identifying and addressing risks.
²⁷ This must be done in writing, see what casino operators must maintain a record in writing of.

Risk-based approach

1 Introduction

The Regulations impose compulsory requirements and a breach can constitute a criminal offence²⁸. However, within this legal framework of requirements, casinos have flexibility to devise policies, procedures and controls which best suit their assessment of the money laundering, terrorist financing and proliferation financing risks faced by their business. The Regulations require the identification and assessment of money laundering, terrorist financing and proliferation financing risks, and the establishment and maintenance of proportionate policies, procedures and controls to mitigate and manage effectively the risks identified.²⁹

Operators are already expected to manage their operations with regard to the risks posed to the licensing objectives in the Act, and measure the effectiveness of the policies, procedures and controls they have put in place to manage the risks to the licensing objectives. The approach to managing the risks of the operator being used for money laundering, terrorist financing or proliferation financing is consistent with the regulatory requirements.

Most operators manage their commercial or business risks and measure the effectiveness of the policies, procedures and controls they have put in place to manage those risks. A similar approach is appropriate to managing the operator’s regulatory risks, including money laundering, terrorist financing and proliferation financing risks. Existing risk management systems should, therefore, address the regulatory and money laundering and terrorist financing risks, or a separate system should be in place for that purpose. The detail and complexity of these systems will depend on the operator’s size and the complexity of their business.

The possibility of gambling facilities being used by criminals to assist in money laundering, terrorist financing or proliferation financing poses many risks for casino operators. These include criminal and regulatory sanctions for operators and their employees, civil action against the operator and damage to the reputation of the operator, leading to a potential loss of business.

Casino operators can offset any burden of taking a risk-based approach with the benefits of having a realistic assessment of the threat of the operator being misused in connection with money laundering, terrorist financing or proliferation financing. It focuses the effort where it is most needed and will have most impact. It is not a blanket one size fits all approach, and therefore operators have a degree of flexibility in their methods of compliance.

A risk-based approach requires the full commitment and support of senior management, and the active co-operation of all employees. It should be part of the casino operator’s philosophy and be reflected in the operator’s policies, procedures and controls. There needs to be a clear communication of the policies, procedures and controls to all employees, along with robust mechanisms to ensure that they are carried out effectively, weaknesses are identified, and improvements are made wherever necessary. Where the casino operator forms part of a larger group of companies, there needs to be sufficient senior management oversight of the management of risk.

The figures in this guidance include a proposed architecture for the risk-based process which operators can adopt as good practice within their businesses. While this architecture represents a suggested approach, it does nonetheless contain elements which are requirements under the Regulations or other financial crime legislation. These requirements are detailed throughout the guidance.

---

²⁸ Regulation 86.
²⁹ Regulations 18, 18A, 19 and 19A.

2 Identifying and assessing the risks

The Regulations require casino operators to take appropriate steps, taking into account the size and nature of its business, to identify and assess the risks of money laundering, terrorist financing and proliferation financing to which its business is subject, taking into account the following:

• information on the risks of money laundering and terrorist financing made available to them by the Commission and, in the case of proliferation financing, information in the report by Treasury referred to in Regulation 16A (the proliferation financing risk assessment)³⁰
• risk factors.

Risk factors include factors relating to:

• its customers
• the countries or geographic areas in which it operates
• its products or services
• its transactions
• its delivery channels³¹

Casino operators must:

• keep an up-to-date record in writing of all the steps taken to identify and assess the risks of money laundering, terrorist financing and proliferation financing to which its business is subject
• provide the written record, the risk assessment it has prepared and the information on which it was based to the Commission on request.³²

Assessing risk

The casino operator should assess its risks in the context of how it is most likely to be involved in money laundering, criminal spend, terrorist financing or proliferation financing.

Operators should also give due consideration to the money laundering risks posed by their business-to-business relationships, including any third parties they contract with. The assessment of these risks is based, among other things, on the risks posed to the operator by transactions and arrangements with business associates and third-party suppliers such as payment providers and processors, including their beneficial ownership and source of funds. Effective management of third-party relationships should assure operators that the relationship is a legitimate one, and that they can evidence why their confidence is justified.³³

---

³⁰Regulation 18A
³¹Regulation 18(1), (2) and (3), and 18A
³²Regulation 18(4) and (6).
³³The World Economic Forum's good practice guidelines on conducting third party due diligence.

3 Risk assessments

A money laundering and terrorist financing risk assessment is a product or process based on a methodology, agreed by the parties involved, that attempts to identify, analyse and understand money laundering and terrorist financing risks. It serves as the first step in addressing the risks and, ideally, involves making judgments about threats, vulnerabilities and consequences.

Risk is a function of three factors

Threats

Persons, or groups of people, objects or activities with the potential to cause harm, including criminals, terrorist groups and their facilitators, their funds, as well as past, present and future money laundering or terrorist financing activities.

Vulnerabilities

Things that can be exploited by the threat or that may support or facilitate its activities and means focussing on the factors that represent weaknesses in AML or CTF systems or controls or certain features of a country, particular sector, financial product or type of service that make them attractive for money laundering and terrorist financing.

Consequences

This refers to the impact or harm that money laundering or terrorist financing may cause, including the effect of the underlying criminal and terrorist activity on financial systems and institutions, the economy and society more generally.

The key to any risk assessment is that it adopts an approach that attempts to distinguish the extent of different risks to assist with prioritising mitigation efforts, rather than being a generic box-ticking exercise.

The risk assessment process should consist of the following standard stages:

Money laundering and terrorist financing risks may be measured using a number of factors. Application of risk categories to customers and situations can provide a strategy for managing potential risks by enabling casino operators to subject customers to proportionate controls and monitoring.

The standard risk categories used by FATF for casinos are:

• country or geographic risk
• customer risk
• transaction risk.

Casinos should also consider the risks posed by particular products they offer.³⁴

Country and geographic risk

Some countries pose an inherently higher money laundering and terrorist financing risk than others. In addition to considering their own experiences, casino operators should take into account a variety of other credible sources of information identifying countries with risk factors in order to determine that a country and customers from that country pose a higher risk. Casino operators may wish to assess information available from FATF and non-governmental organisations which can provide a useful guide to perceptions relating to corruption in the majority of countries.

Customers that are associated with higher risk countries, as a result of their citizenship, country of business or country of residence may present a higher money laundering and terrorist financing risk, taking into account all other relevant factors. Remote casinos should check customer location because of the additional risks which arise from cross-border operations. The country or geographic risk can also be considered in conjunction with the customer risk.

Customer risk

Determining the potential money laundering and terrorist financing risks posed by a customer, or category of customers, is critical to the development and implementation of an overall risk-based framework. Based on its own criteria, a casino should seek to determine whether a particular customer poses a higher risk and the potential impact of any mitigating factors on that assessment. Application of risk variables may mitigate or exacerbate the risk assessment.

Categories of customers whose activities may indicate a higher risk include:

• customers who are PEPs, family members of PEPs or known close associates of PEPs
• high spenders – the level of spending which will be considered to be high for an individual customer will vary among casino operators, and among casinos managed by the same operator
• disproportionate spenders – casino operators should obtain information about customers’ financial resources so that they can determine whether customers’ spending is proportionate to their income or wealth
• casual customers – this includes tourists, participants in junkets and local customers who are infrequent visitors
• regular customers with changing or unusual spending patterns
• improper use of third parties – criminals may use third parties or agents to avoid CDD undertaken at the threshold or to buy chips, or they may be used to gamble so as to break up large amounts of cash
• junkets – junkets can pose several higher risks, including criminal control of the junket operator or participants, the movement of funds across borders which obscures the source and ownership of the money gambled by participants and their identities, and structuring, refining and currency exchange risks
• multiple player accounts – some customers will open multiple player accounts under different names to hide their spending levels or to avoid breaching the CDD threshold
• unknown or anonymous customers – these customers may purchase large amounts of chips with cash at casino tables, and then redeem the chips for large denomination notes after minimal or no play.

Transaction risk including means of payment

Casinos should consider operational aspects (products, services, games, accounts and account activities) that can be used to facilitate money laundering and terrorist financing.

Land-based and remote casinos also have the following potential transaction risks:

• proceeds of crime – there is a risk that the money used by a customer has been gained through criminal activity, so greater monitoring of high spenders will help to mitigate the risk
• cash – customers may use non-remote casinos to exchange large amounts of criminal proceeds, or may deposit criminal proceeds into an internet gambling account at a non-remote casino
• transfers between customers – customers may transfer money between themselves or may borrow money from unconventional sources, including other customers, which can offer criminals an opportunity to introduce criminal proceeds into the legitimate financial system through the casino
• use of casino deposit accounts – criminals may use accounts to deposit criminal proceeds and then withdraw funds with little or no play
• redemption of chips, tickets or tokens for cash or cheque, particularly after minimal or no play.

Particularly in remote casinos:

• multiple gambling accounts or wallets – customers may open multiple accounts or wallets with an operator in order to obscure their spending levels or to avoid CDD threshold checks
• changes to bank accounts – customers may hold several bank accounts and regularly change the bank account they use for the remote casino operator
• identity fraud – details of bank accounts may be stolen and used on remote gambling websites, or stolen identities may be used to open bank accounts or remote gambling accounts
• pre-paid cards – these cards pose the same risks as cash, as remote casino operators normally cannot perform the same level of checks on the cards as they can on bank accounts
• e-wallets – some e-wallets accept cash on deposit or cryptocurrencies, which pose a higher risk, and some customers may use e-wallets to disguise their gambling
• games involving multiple operators – for example, poker games often take place on platforms shared by a number of remote gambling operators, which can facilitate money laundering by customers, such as chip dumping.

Product risk

Product risk includes the consideration of the vulnerabilities associated with the particular products offered by the casino operator. In non-remote casinos there are a number of gambling opportunities that offer the potential for a money launderer to place funds and generate a winning cheque or similar with minimal play. These are more fully discussed in transaction risk including means of payment and include the use of cash and casino deposit accounts, and the redemption of chips. Also, a number of gambling activities take place in remote and non-remote casinos where customers effectively play against each other. This offers the money launderer a means to transfer value by deliberately losing to the individual to whom they want to transfer the funds.

Products which may pose a money laundering risk for the casino operator include:

• peer to peer gaming
• gaming where two or more persons place opposite, equivalent stakes on even, or close to even, stakes. For example, the same stake on red and on black in a game of roulette, including electronic roulette
• gaming machines which can be used to launder stained or fraudulent bank notes.

The risk categories or factors described previously are not intended to be prescriptive or comprehensive. They will not apply universally to all casino operators and, even when they are present, there may be different risk outcomes for different operators and premises, depending upon a host of other factors. However, the factors are intended as a guide to help casino operators conduct their own risk assessments, and to devise AML or CTF policies, procedures and controls which accurately and proportionately reflect those assessments.

The weight given to the risk factors used by the casino operator in assessing the overall risk of money laundering and terrorist financing, both individually or in combination, may vary from one operator or premises to another, depending on their respective circumstances. Consequently, casino operators also must make their own determination as to the weight given to risk factors.

Risk levels may be impacted by a number of variables

These will also have an impact on the preventative measures necessary to tackle the risks in a proportionate manner.

These variables include:

• whether the casino operator’s business model is focused on attracting a large number of customers who gamble relatively small amounts
• whether the casino operator’s business model is focused on attracting a small number of customers who gamble relatively large amounts
• speed and volume of business
• for non-remote casinos, the size of the premises
• the customer profile, for example whether the majority of customers are regular visitors or are members
• the customer profile, for example whether the casino relies on passing trade, including tourists or those who are part of junkets (for non-remote casinos)
• for non-remote casinos, whether the casino has VIP rooms or other facilities for high rollers
• types of financial services offered to customers
• types of customer payments and payment methods
• types of gambling products offered
• the customers’ gambling habits
• staffing levels and staff experience and turnover
• the type and effectiveness of existing gambling supervision measures and mechanisms
• whether the casino operator owns or manages other non-remote and remote casinos
• whether the casino operator offers different types of gambling
• whether the casino operator has other internet gambling websites
• whether the casino is standalone or integrated with other leisure facilities
• whether the casino operator is based in one country or has a gambling presence in multiple countries.

Higher level of risk

Deciding that a customer presents a higher risk of money laundering or terrorist financing does not automatically mean that the person is a criminal, money launderer or terrorist financier. Similarly, identifying a customer as presenting a low risk of money laundering or terrorist financing does not mean that the customer is definitely not laundering money or engaging in criminal spend. Employees therefore need to remain vigilant and use their experience and common sense in applying the casino operator’s risk-based criteria and rules, seeking guidance from their nominated officer as appropriate.

Many customers carry a lower money laundering or terrorist financing risk. These might include customers who are regularly employed or who have a regular source of income from a known source which supports the activity being undertaken. This applies equally to pensioners, benefit recipients, or to those whose income originates from their partner’s employment or income.

Conversely, many customers carry a higher risk of money laundering. These may include known criminals, customers who are not regularly employed or who do not have a regular source of income from a known source which supports the level of activity being undertaken, or problem gamblers.

Where a customer is assessed as presenting higher risk, additional information in respect of that customer should be collected. This will help the casino operator judge whether the higher risk that the customer is perceived to present is likely to materialise, and provide grounds for proportionate and recorded decisions. Such additional information should include an understanding of where the customer’s funds and wealth have come from. While the Commission recognises that some relationships with customers will be transient or temporary in nature, casino operators still need to give consideration to this issue.

If casinos adopt the threshold approach to CDD, part of the risk-based approach will involve making decisions about whether or when verification should take place electronically. Casino operators must determine the extent of their CDD measures, over and above the minimum requirements, on a risk-sensitive basis depending on the risk posed by the customer and their level of gambling.

In order to be able to detect customer activity that may be suspicious, it is necessary to monitor all transactions or activity³⁵ The monitoring of customer activity should be carried out using the risk-based approach. Higher risk customers should be subjected to a frequency and depth of scrutiny greater than may be appropriate for lower risk customers. Casino operators should be aware that the level of risk attributed to customers may not correspond to their commercial value to the business.

Casino operators are best placed to identify and mitigate risks involved in their business activity. A crucial element of this is to have systems and controls to identify and link player activity, and for senior management to oversee risk management and determine whether their policies, procedures and controls are effective in design and application. Reliance on third parties to conduct risk assessment and management functions does not relieve the operator of its responsibility to assess and manage its own risks. Third party services should not be used in isolation or relied upon solely, and casino operators should be satisfied that the information supplied by the third party is sufficiently detailed, reliable and accurate.

There is a risk that customers will place and layer criminal proceeds through gambling transactions. We recommend that one way of mitigating this risk is to link the pay out of winnings with the means by which a customer pays for gambling transactions. We acknowledge that this will not eliminate the risk, but returning winnings in the same form, for example in cash or back to the same bank account, limits the opportunity for a money launderer to layer the proceeds of criminal activity. Where it is not feasible to return funds to the source or in the same form, casino operators should have controls in place to manage the risk of money laundering or terrorist financing occurring in these circumstances.

---

³⁴ The risk categories used by the Commission in Money laundering and terrorist financing risk within the British gambling industry are customer, product and means of payment (as well as operator controls, and licensing and integrity controls). Regulation 18 of the Regulations require casinos to take into account risks factors, including factors in relation to their customers, the countries or geographic areas in which they operate, their products or services, transactions and delivery channels.
³⁵ Regulation 8.

4 Dynamic risk management

A money laundering or terrorist financing risk assessment is not a one-off exercise. Casino operators must therefore ensure that their policies, procedures and controls for managing money laundering and terrorist financing risks, including the detection of criminal spend, are kept under regular review.

Casino operators need to continually identify, assess and manage risks

This should be done just like any other business risk. They should assess the level of risk in the context of how their business is structured and operated, and the controls in place to minimise the risks posed to their business by money launderers and terrorist financers, including those engaged in criminal spend. The risk-based approach means that casino operators focus their resources on the areas which represent the greatest risk. The benefits of this approach include a more efficient and effective use of resources, minimising compliance costs and the flexibility to respond to new risks as money laundering and terrorist financing methods change.

There is a specific requirement in the Regulations that, when new products, business practices or technology are adopted by casino operators, appropriate measures are taken in preparation for, and during, the adoption of such products, business practices or technology to assess and, if necessary, mitigate any money laundering or terrorist financing risks the new product, business practice or technology may cause.³⁷

Proliferation financing risk assessment

Casino operators must also compile a proliferation financing risk assessment (see section '2 - Identifying and assessing the risks' within this guidance). This risk assessment must take into account the following:

• the size and nature of its business
• information in the report by Treasury referred to in Regulation 16A (the proliferation financing risk assessment).

The risk assessment must also take into account risk factors relating to:

• its customers
• the countries or geographic areas in which it operates
• its products or services
• its transactions
• its delivery channels.³⁸

It is recommended that casino operators follow the same approach and methodology as that used for the money laundering and terrorist financing risk assessment discussed in the preceding paragraphs.

---

³⁶ In relation to specific requirements for the adoption of new products, business practices or technology.
³⁷ Regulation 19(4)(c).
³⁸ Regulation 18A.

Customer relationships

1 Customer relationships

Casino operators should be mindful that some risk indicators, for example, a pattern of increasing spend or spend inconsistent with apparent source of income could be indicative of money laundering, but also equally of problem gambling, or both.

There may also be patterns of play, for example, chasing losses that appear to be indicative of problem gambling that could also be considered to indicate other risks. For example, spend that is inconsistent with the individual’s apparent legitimate income could be the proceeds of crime.

While patterns of play may be one indicator of risk, casino operators should satisfy themselves that they have asked, or are prepared to ask, the necessary questions of customers when deciding whether to establish a business relationship, maintain the relationship or terminate the relationship.

In summary, it is perfectly plausible that an individual attempting to spend criminal proceeds or launder money could also be a problem gambler, but one does not necessarily follow the other. The responsibility is on the operator to be able to understand these dynamics and mitigate any risks to the licensing objectives.

Casino operators are subject to certain provisions of POCA, the Regulations and the Act (and the relevant licence conditions and codes of practice)

Operators have the responsibility to comply with the licensing objectives and, therefore, they should carry out appropriate enquiries and assessments to ensure they do so. While the conclusions drawn and actions taken may differ according to whether money laundering and/or social responsibility risks are identified, the effective identification and management of these risks rests upon the ability of casino operators to have a comprehensive knowledge of their customer relationships and for managers to be clear on their responsibilities.

It is also important that the casino operator is able to reconcile information relating to customers’ gambling activities in different parts of the business so that they have a more complete picture of the risks posed by the activities of individual customers.

Commercial and business information should be considered for AML as well as social responsibility purposes when transacting with an individual. This should include arrangements for the monitoring of customers with whom a business relationship has been established. For example, information about customer spend can be used by the casino operator to proactively monitor high risk customers in relation to their money laundering risk.

Customer relationships need to be managed proficiently and records should be maintained as to what information was communicated to the customer, why it was communicated and what considerations were made. If players expect that customer interaction is likely should they play with large amounts of money, or for lengthy periods, and such interaction is consistently applied, there would be less reason for players to question or become suspicious of the motives of these interactions. Casino operators may find it helpful to provide their customers with a leaflet which explains why they are being asked questions about their game play.

Customer relationships for AML purposes consist of three aspects:

• the establishment of the business relationship with the customer, including verification of the customer’s identity to a reasonable degree
• the monitoring of customer activity, including account deposits and withdrawals
• the termination of the business relationship with the customer.

At all stages of the relationship it is necessary to consider whether the customer is engaging in money laundering or terrorist financing (including criminal spend); whether there is a need to report suspicious activity or seek a defence (appropriate consent); and any risks posed to the licensing objectives.

2 Establishment of business relationship

A business relationship is a business, professional or commercial relationship between a casino operator and a customer which arises out of the business of the casino operator and is expected by the operator, at the time when the contact is established, to have an element of duration³⁹. Casino operators are advised to interpret this definition widely.

When a business relationship with a customer of a casino operator is likely to occur

This list is not exhaustive and a casino operator will need to form its own view of when contact is established, or circumstances otherwise arise, with a customer from which it expects, or it could reasonably be inferred that it expects, that the relationship with the customer will have an element of duration. The Commission acknowledges that this may not necessarily be the case when a casino operator permits a customer to join a casino loyalty scheme.

Where it is known that the customer is attempting to use the casino operator to launder criminal proceeds (including criminal spend), the operator must carefully consider whether either not to establish the business relationship, or to suspend or terminate the business relationship at the earliest opportunity. In either case, it is recommended that a SAR is submitted to the NCA and, where there are funds to be returned to the customer, seek a defence (appropriate consent) to a principal money laundering offence.

There is further discussion of business relationships in section '2 - Business relationships' of this guidance.

---

³⁹ Regulation 4(1).

3 Customer monitoring

Where, through their customer profile or known pattern of gambling activity, the customer appears to pose a risk of actual or potential money laundering, the casino operator must monitor the gambling activity of the customer and consider whether further due diligence measures are required. This should include a decision about whether a defence (appropriate consent) should be sought for future transactions (on a transaction by transaction basis), or whether the business relationship with the customer should be terminated where the risk of breaches of POCA are too high.

Casino operators should ensure that the arrangements that they have in place to monitor customers and the accounts they hold across outlets, products and platforms (remote and non-remote) are sufficient to manage the risks that the operator is exposed to. This should include the monitoring of account deposits and withdrawals. Those casino operators that rely heavily on gaming machines should also have practical systems in place to effectively monitor and reconcile customer spend on gaming machines. Any suspicious activity should be reported by means of a SAR to the NCA.

Once knowledge or suspicion of criminal spend is linked to a customer in one area of the business, for example gaming machine play, casino operators should monitor the customer’s activity in other areas of the business, for example table games.

If the customer’s patterns of gambling lead to an increasing level of suspicion of money laundering, or to actual knowledge of money laundering, casino operators should seriously consider whether they wish to allow the customer to continue using their gaming facilities, otherwise the operator may potentially commit one of the principal money laundering offences.

Customer monitoring forms part of section '2 - Business relationships' within this guidance and section '6 - Ongoing monitoring' within this guidance.

---

6 - Ongoing monitoring

4 Termination of business relationship

As already discussed, to avoid potentially committing one of the principal money laundering offences, casino operators need to consider ending the business relationship with a customer in the following circumstances:

• where it is known that the customer is attempting to use the operator to launder criminal proceeds or for criminal spend
• where the risk of breaches to POCA are considered by the operator to be too high
• where the customer’s gambling activity leads to an increasing level of suspicion, or actual knowledge of, money laundering
• where the customer is proven to a reasonable degree of confidence to not be the identity they claim to be.

Additionally, where, in relation to any customer, the casino operator is unable to apply CDD measures, the business relationship with the customer must be terminated and the operator must submit a SAR to the NCA where they consider the circumstances to be suspicious.⁴⁰

Where the casino operator terminates a business relationship with a customer and they know or suspect that the customer has engaged in money laundering, they should seek a defence (appropriate consent) from the NCA before paying out any winnings or returning funds to the customer.

---

⁴⁰ Regulation 31.

Senior management responsibility

1 Introduction

Senior management must be fully engaged in the processes for a casino operator’s assessment of risks for money laundering, terrorist financing and proliferation financing, and must be involved at every level of the decision making to develop the operator’s 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.

It is considered best practice, and is explicit in parts of the Regulations, that a risk-based approach should be taken to tackling money laundering, terrorist financing and proliferation financing.

Casino operators, using a risk-based approach, should start from the principle that most customers are not money launderers, terrorist financers or proliferation financers. However, operators should have policies, procedures and controls in place to highlight those customers who, according to criteria established by the operator, may present a higher risk. The policies, procedures and controls should be proportionate to the risks presented.

---

⁴¹Regulation 3(1).

2 Obligations on all casino operators

An officer of a licensed casino operator which is subject to the Regulations (that is, a director, manager, secretary, chief executive, member of the management committee, or a person purporting to act in such a capacity) 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 their part, will be individually liable for the offence.⁴²

Senior management should require that the nominated officer provides an annual report covering the operation and effectiveness of the operator’s systems and controls to combat money laundering, terrorist financing and proliferation financing, and take any action necessary to remedy deficiencies identified by the report in a timely manner. In practice, senior management should determine the depth and frequency of information provided by the nominated officer that they feel is necessary to discharge their responsibilities. The nominated officer may also wish to report to senior management more frequently than annually, as circumstances dictate. The nominated officer may not need to provide the names of suspected persons in any report.

---

⁴²Regulation 92.

3 Policies, procedures and controls

Casino operators must establish and maintain policies, procedures and controls to mitigate and manage effectively the risks identified in the operator's risk assessment of money laundering, terrorist financing and proliferation financing.

In determining what is appropriate or proportionate with regard to the size and nature of their business, casino operators may take into account any guidance issued by the Commission or appropriate body, and approved by HM Treasury.⁴⁴. An appropriate body is a body which regulates or is representative of any trade, profession, business or employment carried on by a casino operator⁴⁵ (and includes trades bodies such as the Betting and Gaming Council).

Internal controls

Casino operators must, where relevant, communicate the policies, procedures and controls they establish and maintain to their branches and subsidiary undertakings which are located outside the UK.⁴⁹

---

⁴³Regulations 19(1) and (2), and 19A.
⁴⁴ Regulation 19(5).
⁴⁵Regulation 3(1).
⁴⁶Regulation 19(1)(c) and 19A.
⁴⁷Regulation 19(3). In relation to proliferation financing, only the following apply: (a) risk management; (b) internal controls; and (c) the monitoring and management of compliance with, and the internal communication of, the policies, procedures and controls.
⁴⁸Regulation 19(4) and 19A.
⁴⁹Regulation 19(6) and 19A.

4 Internal controls

Where appropriate, with regard to the size and nature of the business, a casino operator must appoint a member of its board of directors (or equivalent management body if there is no board) or of its senior management as the officer responsible for the operator's compliance with the Regulations.⁵⁰

In determining what is appropriate or proportionate with regard to the size and nature of their business, casino operators must take into account their risk assessment and should take into account any guidance issued by the Commission or appropriate body, and approved by HM Treasury.⁵¹ An appropriate body is a body which regulates or is representative of any trade, profession, business or employment carried on by a casino operator⁵² (and includes trades bodies such as the Betting and Gaming Council).

Where the casino operator appoints a board member as the officer responsible for the operator's compliance with the Regulations, it is important that this member and the director or senior manager who is allocated the overall responsibility for the establishment and maintenance of the operator's AML and CTF systems (where they are not the same person) are clear on their responsibilities.

The casino operator must, within 14 days of the appointment, inform the Commission of the identity of the individual appointed as the officer responsible for the operator's compliance with the Regulations, and any subsequent appointment to that position.⁵³ In order to meet this requirement, operators should comply with licence condition 15.2.3(2) and (3).

The internal controls must, where appropriate with regard to the size and nature of the casino operator's business, also provide for:

Carrying out screening of relevant employees appointed by the operator, both before the appointment is made and during the course of the appointment, where:

• screening means an assessment of the skills, knowledge and expertise of the individual to carry out their functions effectively, and the conduct and integrity of the individual

A relevant employee is an employee whose work is:

• relevant to the operator's compliance with any requirement in the Regulations
• otherwise capable of contributing to the identification or mitigation of the risks of money laundering, terrorist financing and proliferation financing to which the operator is subject, or the prevention or detection of money laundering, terrorist financing and proliferation financing in relation to the operator's business.

The establishment of an independent audit function with the responsibility to:

• examine and evaluate the adequacy and effectiveness of the policies, procedures and controls adopted by the operator to comply with the Regulations
• make recommendations in relation to those policies, procedures and controls
• monitor the operator's compliance with those recommendations.⁵⁴

In determining what is appropriate or proportionate with regard to the size and nature of their business, casino operators must take into account their risk assessment and should take into account any guidance issued by the Commission or appropriate body, and approved by HM Treasury.⁵⁵ An appropriate body is a body which regulates or is representative of any trade, profession, business or employment carried on by a casino operator⁵⁶ (and includes trades bodies such as the Betting and Gaming Council).

Casino operators must establish and maintain systems that enable them to respond fully and rapidly to enquiries from financial investigators accredited under section 3 (opens in a new tab), of POCA, persons acting on behalf of the Scottish Ministers in their capacity as an enforcement authority under POCA, or constables or equivalent officers of any law enforcement authority, in relation to:

• whether it maintains, or has maintained during the previous five years, a business relationship with any person
• the nature of the relationship.⁵⁷

---

⁵⁰Regulation 21(1)(a).
⁵¹Regulation 21(10).
⁵²Regulation 3(1).
⁵³Regulation 21(4).
⁵⁴Regulation 21.
⁵⁵Regulation 21(10).
⁵⁶Regulation 3(1).
⁵⁷Regulation 21.

5 Training

The Regulations require that all relevant employees of casinos must be trained on the prescribed AML and CTF topics⁵⁸ .

One of the most important controls for the prevention and detection of money laundering, terrorist financing and proliferation financing is to have employees who are alert to the risks of money laundering, terrorist financing and proliferation financing, and who are well trained in the identification of unusual activities or transactions which appear to be suspicious, as well as in the accurate verification of customers’ identities. The effective application of even the best designed control systems can be quickly compromised if the employees applying the systems are not adequately trained. The effectiveness of the training will therefore be important to the success of the casino operator’s AML or CTF strategy.

Casino operators should devise and implement a clear and well-articulated policy and procedure for ensuring that relevant employees are aware of their legal obligations in respect of the prevention of money laundering, terrorist financing and proliferation financing, and for providing them with regular training in the identification and reporting of anything that gives grounds for suspicion of money laundering, terrorist financing or proliferation financing. Casino operators should also monitor the effectiveness of such training, to ensure that all employees are trained in an appropriate and timely manner, and that the training is fit for purpose.

The Regulations require casino operators to take appropriate measures so that their relevant employees, and any agents they use for the purposes of their business whose work is of a kind mentioned in the following 'Relevant employees' section, are:

• made aware of the law relating to money laundering, terrorist financing and proliferation financing, and to the requirements of data protection, which are relevant to the implementation of the Regulations
• regularly given training in how to recognise and deal with transactions and other activities or situations which may be related to money laundering, terrorist financing or proliferation financing.⁵⁹

Relevant employees

Casino operators must maintain a record in writing of the appropriate training measures they have taken and, in particular, of the training given to their relevant employees and to any agents they use for the purposes of their business whose work is of a kind mentioned in the following paragraph.⁶⁰

'Relevant employees' are employees whose work is relevant to the casino operator's compliance with any requirements in the Regulations, or able to contribute to:

• the identification or mitigation of the risk of money laundering, terrorist financing or proliferation financing to which the operator's business is subject, or
• the prevention or detection of money laundering, terrorist financing or proliferation financing in relation to the operator's business.⁶¹

This includes the holders of personal management licences and personal functional licences issued by the Commission, as well as employees responsible for completing CDD measures and any agents used by the operator to undertake the work mentioned previously.

The content of any training, the regularity of training and the assessment of competence following training are matters for each casino operator to assess and decide in light of the money laundering, terrorist financing and proliferation financing risks they identify, provided the requirements of regulation 24 are met. The Commission will expect such issues to be covered in each operator’s policies and procedures. These should make provision for the attainment of an appropriate competence level by the relevant employees prior to them undertaking the duties for which they will be responsible. This may, for example, be achieved by the attainment of an appropriate pass rate in a competency test following training.

Training methods

There is no single solution when determining how to deliver training and a mix of training methods may, therefore, be appropriate. Online training systems can provide a solution for many employees, but this approach may not be suitable for all employees. Classroom training can be more effective in these circumstances.

Procedure manuals, whether paper or electronic, are useful in raising employee awareness and can supplement more dedicated forms of training, but their main purpose is generally to provide ongoing reference rather than being written as training material.

Ongoing training must be given to all relevant employees at appropriate intervals. Records should be maintained to monitor who has been trained, when they received the training, the nature of the training and the effectiveness of the training.

The nominated officer should be heavily involved in devising and managing the delivery of such training, taking particular care to ensure that systems are in place to cover all part time or casual employees.

We would also recommend that casino operators consult our AML webpages (opens in new tab) which has useful information. This includes statements regarding AML controls and links to other AML resources.⁶⁴

---

⁵⁸Regulation 24.
⁵⁹Regulation 24(1).
⁶⁰Regulation 24(1)(b).
⁶¹Regulation 24(2).
⁶²Regulation 24(3).
⁶³Home Office guidance on examining identity documents.
⁶⁴Gambling Commission AML webpage.

Nominated officer

1 Nominated officer

Casino operators must appoint an individual in their firm⁶⁵ as a nominated officer⁶⁶, who is responsible for:

• receiving internal disclosures under Part 7 (opens in a new tab) of POCA and Part III (opens in a new tab) of the Terrorism Act
• deciding whether these should be reported to the NCA
• if appropriate, making such external reports
• ensuring that a defence (appropriate consent) is applied for as necessary.

Each entity licensed by the Commission should have a dedicated nominated officer

This is as a matter of good practice. Where the function is performed by one person for multiple licensees within the same group, the Commission would seek assurances, with supporting information, that the nominated officer has sufficient oversight of AML across all those licensed entities. This does not allow the nominated officer function to be outsourced to an individual independent of the firm. The requirement to appoint a nominated officer does not apply where the casino operator does not employ, or act in association with, any other person⁶⁷.

The nominated officer's role

The role of the nominated officer is to apply the same rigour in their approach to managing money laundering, terrorist financing and proliferation financing risk as the operator does in managing its commercial systems. The nominated officer should report to the board internally (or to the chief executive for small organisations), and direct to the NCA in relation to known or suspected money laundering, terrorist financing or proliferation financing activity (including criminal spend), request a defence, or both (appropriate consent).

The nominated officer should be able to monitor the day-to-day operation of the operator’s AML and CTF policies and respond promptly to any reasonable request for information made by the Commission or law enforcement bodies. The nominated officer is expected to take ultimate managerial responsibility for AML issues, but this does not diminish senior management responsibility for AML.

The term 'nominated officer' is used and defined in the Regulations⁶⁹ .

---

⁶⁵In the context of the Regulations, 'firm' means the holder of a casino operating licence issued by the Commission.
⁶⁶Regulation 21(3).
⁶⁷Regulation 21(6).
⁶⁸Regulation 21(4).
⁶⁹Regulation 3(1).

2 Standing of the nominated officer

The nominated officer is responsible for the oversight of all aspects of the casino operator’s AML and CTF activities at all premises. They are the focal point for all activity within the operator relating to AML. The individual appointed as nominated officer must have a sufficient level of seniority. The nominated officer should hold a personal management licence (PML) issued by the Commission. The job description of the nominated officer should clearly set out the extent of the responsibilities given to them and their objectives. The nominated officer will need to be involved in establishing the basis on which a risk-based approach to the prevention of money laundering, terrorist financing and proliferation financing is put into practice.

In determining the status of the nominated officer and identifying the appropriate position for this officer within the overall organisational structure, casino operators need to ensure their independence within the business and that they have access to all relevant information to enable them to discharge their duties. Responsibilities will include objectively reviewing decisions and, on occasions, making recommendations that may conflict with, for instance, short term operational goals.

We recognise some casino operators may have a structure in which the nominated officer will hold other roles and responsibilities

The Commission is content, for example, that the nominated officer may take on other compliance roles and responsibilities. However, this is subject to the key principles set out here, including the ability to report directly to the board or the head of the organisation and the NCA, and the ability to make AML decisions independently of operational concerns.

The casino operator's senior management must ensure that the nominated officer has sufficient resources available, including appropriate employees, technology and training. This should include arrangements that apply in the temporary absence of the nominated officer.

Delegation

Where a nominated officer is temporarily unavailable, another PML holder may deputise. Casino operators should consider appointing a permanent deputy nominated officer.

Where a casino operator’s nominated officer delegates to another employee, the nominated officer remains responsible for AML issues and is likely to remain liable for the commission of any criminal offences relating to POCA, the Terrorism Act (opens in a new tab) or the Regulations.

3 Internal and external reports

A casino operator must require that anyone working for the operator, to whom information or other matter comes in the course of business, as a result of which they know or suspect, or have reasonable grounds for knowing or suspecting, that a person is engaged in money laundering, terrorist financing or proliferation financing makes an internal report to their nominated officer.

Whilst disclosure to another of the fact that a person may be engaged in money laundering is generally an offence⁷⁰ , such disclosures to a nominated officer, constable or customs officer are specifically protected, where they are made as soon as is practicable and the information came to their attention in the course of their trade, profession, business or employment.⁷¹

Any internal report should be considered by the nominated officer, in the light of all other relevant information available to the nominated officer, to determine whether or not the report gives rise to knowledge or suspicion, or reasonable grounds for knowledge or suspicion, that a person is engaged in money laundering, terrorist financing or proliferation financing.

The nominated officer must be fully conversant with the legal obligations to make external reports to the NCA. Many of the records required by the Regulations relate to work done, or decisions made, by the nominated officer, including records of why reports have not been made to the NCA.

---

⁷⁰Section 333A of POCA.
⁷¹Section 337 of POCA.

Customer due diligence

1 Introduction

In the Regulations, a key requirement is to make checks on customers, known as customer due diligence or CDD, which is designed to make it more difficult for the casino industry to be used for money laundering, terrorist financing or proliferation financing purposes. CDD is an integral part of the risk-based approach. It involves gathering information about the customer in order for the operator to assess the extent to which the customer exposes it to money laundering, terrorist financing and proliferation financing risks. CDD should be applied on a risk-sensitive basis depending on the type of customer, the business relationship or the nature of the transactions or activity.

2 Risk-based customer due diligence and risk profiling

Customer risk assessments or customer risk profiling will be informed by the operator’s money laundering or terrorist financing or proliferation financing risk assessment. The operator should assess the extent to which a particular customer triggers the risk factors considered in the risk assessment and graduate the risk profile of the customer accordingly.

This allows operators to take a risk-based approach to customer due diligence, with measures being proportionate to their risk rating. The information that is collected at the commencement of the business relationship with the customer will enable the operator to determine the level of risk associated with the customer and, in turn, the initial and ongoing customer due diligence and monitoring that is required.

Operators will need to consider:

• who the customer is
• what they do, where they live and do business
• the nature of the product or service they require.

Full details of the source of funds to be used in the relationship will also need to be established using a risk-based approach.

The objective of risk-based customer due diligence is to ensure that, as the risks within the business relationship increase, so the level of information obtained and verified increases proportionally.

Risk profiling

The operator should have a policy that is graduated to reflect the risk of the customer. Any risk profiling should also include screening for politically exposed persons (PEPs) and sanctioned persons.

Operators are reminded that sanctions legislation prohibits doing business with sanctioned persons, and PEPs are considered high risk under UK AML legislation⁷².

Higher-risk customers

The authority for signing off new customers should be graduated according to risk. Higher-risk customers should always be escalated to senior management. There is also an expectation that firms will have systems in place to monitor customer behaviours and amend customer risk ratings accordingly. For example, a customer may initially be assessed as low risk but may later display activity which moves them to a high risk category.

For those customers rated as high risk, either initially or later in the business relationship, the firm will need to conduct mandatory enhanced customer due diligence⁷³. This means employing additional measures, including approval from senior management for the business relationship, and conducting enhanced ongoing monitoring.

For some types of higher-risk accounts and relationships the customer’s source of wealth will also need to be established

Source of wealth checks are mandatory for PEPs⁷⁴ and 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 country⁷⁵.

Lower-risk customers

For those customers assessed as low risk, the firm can conduct simplified customer due diligence. Those customers who are medium risk should undergo standard customer due diligence.

---

⁷²Regulation 35.
⁷³Regulation 35.
⁷⁴Regulation 35(5).
⁷⁵Regulation 33(3A).

3 Customer due diligence requirements

Regardless of whether they have established a business relationship with the customer, suspect money laundering or terrorist financing, or doubt the veracity or adequacy of documents or information previously obtained for the purposes of identification or verification, casino operators must also apply CDD measures in relation to any transaction that amounts to €2,000 or more, whether the transaction is executed in a single operation or in several operations which appear to be linked.⁷⁸.

'Transaction' consists of:

The wagering of a stake, including:

• the purchase from, or exchange with, the casino of tokens for use in gambling at the casino
• payment for the use of gaming machines
• the deposit of funds required to take part in remote gambling, or
• the collection of winnings, including the withdrawal of funds deposited to take part in remote gambling or winnings arising from the staking of such funds.⁷⁹

In determining whether a transaction amounts to €2,000 or more, casino operators do not need to take account of winnings from a previous transaction which had not been collected from the casino, gaming machine or remote gambling, but are being re-used in the transaction in question.⁸⁰ This means that casino operators do not need to include restaked winnings (so called 'recycled winnings', 'turnover' or 'churn') when determining whether a customer has reached the €2,000 threshold.

Casino operators must also apply CDD measures:

• at other appropriate times to existing customers on a risk-based approach
• when the operator becomes aware that the circumstances of an existing customer relevant to its risk assessment for that customer have changed.⁸¹

In determining when it is appropriate to apply CDD measures to existing customers, casino operators must take into account the following, among other things:

• any indication that the identity of the customer, or of the customer’s beneficial owner, has changed
• any transactions which are not reasonably consistent with the operator’s knowledge of the customer
• any change in the purpose or intended nature of the operator’s relationship with the customer
• any other matter which could affect the operator’s assessment of the money laundering or terrorist financing risk in relation to the customer.⁸²

---

⁷⁶In this context, 'transfer of funds' means any transaction at least partially carried out by electronic means on behalf of a payer through a payment service provider, with a view to making funds available to a payee through a payment service provider, irrespective of whether the payer and the payee are the same person and irrespective of whether the payment service provider of the payer and that of the payee are one and the same, including: (a) a credit transfer as defined in point (1) of Article 2 of Regulation (EU) No 260/2012; (b) a direct debit as defined in point (2) of Article 2 of Regulation (EU) No 260/2012; (c) a money remittance as defined in point (13) of Article 4 of Directive 2007/64/EC, whether national or cross border; (d) a transfer carried out using a payment card, an electronic money instrument, or a mobile phone, or any other digital or IT prepaid or postpaid device with similar characteristics.
⁷⁷Regulation 27(1).
⁷⁸Regulation 27(5).
⁷⁹Regulation 27(6).
⁸⁰Regulation 27(7).
⁸¹Regulation 27(8).
⁸²Regulation 27(9).

4 Customer due diligence measures

CDD measures consist of:

• identifying the customer, unless the identity of the customer is known to, and has been verified by, the casino operator
• verifying the customer’s identity, unless the customer’s identity has already been verified by the casino operator
• where there is a beneficial owner who is not the customer, identifying the beneficial owner and taking reasonable measures to verify the identity of the beneficial owner so that the casino operator is satisfied that it knows who the beneficial owner is
• assessing and, where appropriate, obtaining information on the purpose and intended nature of the business relationship.⁸³

Where a person claims to act on behalf of a customer (such as an agent), the casino operator must:

• verify that the person is authorised to act on the customer’s behalf
• identify the person
• verify the person’s identity on the basis of documents or information which, in either case, is obtained from a reliable source which is independent of both the person and the customer.⁸⁴

For the purposes of CDD, 'verify' means verifying on the basis of documents or information which, in either case, have been obtained from a reliable source which is independent of the person whose identity is being verified. Documents issued or made available by an official body are to be regarded as being independent of a person even if they are provided or made available to the casino operator by, or on behalf of, that person.⁸⁵

Information may be regarded as 'obtained from a reliable source which is independent of the person whose identity is being verified' where:

• it is obtained by means of an electronic identification process, including by using electronic identification means or by using a trust service⁸⁶, and
• that process is secure from fraud and misuse and capable of providing an appropriate level of assurance that the person claiming a particular identity is in fact the person with that identity.⁸⁷

These requirements apply to customers of both remote and non-remote casinos. Aside from these checks being a statutory requirement in the Regulations, they also help casino operators to avoid the commission of criminal offences under POCA.

The Regulations define casino as 'the holder of a casino operating licence'.⁸⁸ The holder of a casino operating licence does not need to repeat CDD if a customer visits another casino operated by that licensee. CDD records held by a casino operator will need to be available across the operator’s different casino premises and the policies and procedures must include details of how the operator will manage this. Casino operators should note that CDD is ongoing and may need updating for changes in the customer’s circumstances and personal details.

The ways in which a casino operator meets the requirements for CDD and the extent of the measures it takes must reflect the risk assessment it has carried out, and its assessment of the level of risk arising in any particular case. This may differ from case to case.⁸⁹

In assessing the level of risk arising in a particular case, casino operators must take account of factors including, among other things:

• the purpose of a customer account, transaction or business relationship
• the amount deposited by a customer or the size of the transactions undertaken by the customer
• the regularity and duration of the business relationship.⁹⁰

A casino operator is not required to continue to apply CDD measures in respect of a customer where all of the following requirements are met:

• the operator has taken CDD measures in relation to the customer,
• the operator has submitted a suspicious activity report under POCA or the Terrorism Act (opens in a new tab)
• continuing to apply CDD measures in relation to the customer would result in the operator committing tipping off offences under POCA or the Terrorism Act (opens in a new tab).⁹¹

Casino operators should satisfy themselves that the sources of information employed to carry out CDD checks are suitable to mitigate the full range of risks to which they might be exposed, and these would include money laundering and social responsibility risks. For example, local or open source information, such as press reports, may be helpful in carrying out these checks. However, operators should ensure that they are not placing an overreliance on one source of information to conduct these checks.

---

⁸³Regulation 28.
⁸⁴Regulation 28(10).
⁸⁵Regulation 28(18).
⁸⁶Within the meanings those terms have in Regulation 2014/910/EU of the European Parliament and the Council of 23 July 2014 on electronic identification and trust services for electronic communications in the internal market.
⁸⁷Regulation 28(19).
⁸⁸Regulation 14(1)(b).
⁸⁹Regulation 28(12).
⁹⁰Regulation 28(13).
⁹¹Regulation 28(15).
⁹²Regulation 28(16).

5 Timing of verification

Casino operators must comply with the requirement to verify the identity of the customer, any person claiming to act on behalf of the customer and, where applicable, any beneficial owner before the establishment of a business relationship or the carrying out of the transaction.⁹³

The Regulations permit casino operators to complete verification during the establishment of a business relationship if:

• this is necessary so as not to interrupt the normal conduct of business
• there is little risk of money laundering and terrorist financing occurring, provided that the verification is completed as soon as practicable after contact is first established with the customer.⁹⁴

---

⁹³Regulation 30(2).
⁹⁴Regulation 30(3).

6 Ongoing monitoring

The Regulations require casino operators to conduct ongoing monitoring of a business relationship.

This must include the following:

• scrutiny of transactions undertaken throughout the course of the relationship (including, where necessary, the source of funds) to ensure that the transactions are consistent with the casino’s knowledge of the customer, the customer’s business and risk profile
• undertaking reviews of existing records and keeping the documents or information obtained for the purpose of applying CDD measures up-to-date.⁹⁵

Casinos are expected to approach this requirement on a risk-sensitive basis. Dependent on how frequently a casino forms business relationships, it may be good practice to apply ongoing monitoring more widely. Regular players should be the subject of closer scrutiny and their level of play should be assessed with reference to the information already known about them, and where necessary, additional information must be collected and retained about the source of their funds.

---

⁹⁵Regulation 28(11).

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

In the case of transactions that are complex or unusually large, or where there is an unusual pattern of transactions, or the transaction or transactions have no apparent economic or legal purpose, the enhanced measures undertaken must include:

• 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

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

---

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).

8 Threshold approach

As discussed in customer due diligence requirements, the Regulations set out thresholds which, if customer transactions reach these levels, require the casino operator to apply customer due diligence measures.

These limits are:

• in non-remote casinos the 'threshold approach for tokens' – identification and verification are required when a customer purchases from or exchanges with the casino tokens for use in gambling at the casino with a value of €2,000 or more
• in non-remote casinos the 'threshold approach for gaming machines' – identification and verification are required when a customer pays €2,000 or more for the use of gaming machines, or collects winnings amounting to €2,000 or more
• in remote casinos the 'threshold approach for remote gaming' – identification and verification are required when a customer deposits funds to take part in remote gambling or withdraws such funds or winnings amounting to €2,000 or more.

The threshold applies to the wagering of a stake or the collection of winnings, and is to be applied to single transactions or transactions that appear to be linked.

Customers may execute a series of linked transactions that are individually below the €2,000 threshold but, when taken cumulatively, they meet or exceed the threshold.

When transactions are considered linked

Transactions should be considered to be linked if, for example, they are carried out by the same customer through the same game or in one gaming session, or in the case of remote casinos, if they are part of the overall activity undertaken by a customer during a single period of being logged on to the operator's gambling facilities. These examples are not exhaustive and casino operators will need to consider whether there are other circumstances in which transactions are linked.

Casino operators will also need to consider, among other things, whether a customer is deliberately spreading their wagering or collection of winnings over a number of transactions in order to circumvent the CDD requirements. They should also ensure that the triggering of the threshold by a customer is not evaded through the customer opening multiple accounts under fictitious names.

The measures taken by the operator must be balanced against the requirement to conduct CDD on:

• establishing a business relationship with a customer
• requirements for the timing of verification
• the need to conduct enhanced customer due diligence in high risk situations¹⁰⁸.

This should be informed by the risk profile of the particular customer, including circumstances which alter the risk attributed to the customer.

The gaming machine limits only apply in premises-based casinos. By separating the purchase or exchange of tokens from the payment to use gaming machines there is the potential for customers to spend up to €2,000 in gaming machines in addition to the purchase or exchange of tokens up to €2,000.

Under the Regulations, 'gaming machine' has the same meaning as that in the Act¹⁰⁹ . In premises-based casinos, automated and semi-automated table games such as touch-bet roulette are not defined as gaming machines and therefore the take in these games should be counted towards the threshold approach for tokens.

Casino operators will have to satisfy the Commission that they have the mechanisms in place that are appropriate for the spend profile in each premises

For example, a casino with a customer drop/win average considerably below the threshold will need mechanisms in place to monitor customer transactions to be sure that any customer reaching the threshold is picked up in good time to allow CDD to be conducted. Where the casino operator has a number of premises, the Commission will consider the use of the threshold approach for each casino premises rather than for an operator.

Casinos adopting the threshold approach may wish to defer both identification and verification until the threshold is triggered. Alternatively, they may consider that it is more practical to conduct both identification and verification on entry, or conduct identification on entry and defer verification until the threshold is triggered. For example, a premises-based casino may operate a membership scheme where customers are identified on admission to the casino but verification only occurs once the threshold is triggered. Similarly, remote casinos may require customers to identify themselves (and undertake age verification) on registering with the casino, but only require verification of identity if the threshold is triggered. This is sometimes called the hybrid approach.

There may be advantages in asking customers for their identification on entry, even if verification of this information is deferred until the threshold is reached, for example, identifying customers on entry means it will not be necessary to interrupt the customer’s gambling once the threshold is reached and verification becomes necessary. In deciding which approach to take, operators must satisfy themselves and the Commission on a premises-by-premises basis that they have effective procedures, controls and systems in place to track and monitor customers across all the products and platforms that are offered.

Some remote casinos operate a 'wallet' system which allows customers to use the money in their wallet in different parts of the operator’s site. An operator’s site may include some casino games as well as other games. It is only when a customer first enters the casino part of an operator’s website and deposits money that the CDD requirements apply. The Regulations do not apply to people 'window shopping' in a remote casino’s website, it applies only when money is deposited. Where an operator is unsure of what the funds in the wallet will be used for (for example, casino or sports betting), they should consider applying these controls to all customers.

Casinos using the threshold approach must be sure that they are able to end transactions with a customer who reaches the threshold if they are unable to comply with the CDD requirements.

---

¹⁰⁸ Remote casinos should note that, where 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, which requires the use of enhanced customer due diligence measures.
¹⁰⁹Regulation 27(6)(a)(ii).

9 Identification and verification on entry

The on-entry approach requires casinos to identify and verify the identity of the customer before entry to any premises where gaming facilities are provided, or before access is given to remote gambling facilities. Once the customer’s identity is verified, they may commence gaming. See timing of verification.

If a casino using the on-entry approach to CDD is unable to complete the appropriate CDD, they must not allow the customer access to the premises or to the remote gambling. In non-remote casinos this does not allow guests of known customers a single entry without undertaking CDD. However, casino operators should consider using variations of the threshold CDD approach for guests of casino members.

10 Identification and verification

Applying CDD measures involves several steps. The casino operator is required to identify customers and then verify their identities, either upon establishing a business relationship, upon entry or when reaching the threshold. Identification of a customer means being told or coming to know of the customer’s identifying details, such as their name and address.

Verification means proving a customer is who they claim to be by obtaining and validating documents or information which supports this claim of identity. The operator identifies the customer by obtaining a range of information about the customer. The verification of the identity consists of the operator verifying some of this information against documents, data or information obtained from a reliable and independent source.

Casino operators should identify their customers by asking them for personal information, including name, home address and date of birth, or by using other sources of identity, including:

• identity documents, such as passports and photo card driving licences presented by customers
• other forms of confirmation, including assurances from persons within the regulated sector (for example, banks) or employees within the same casino or casino group who have dealt with the customer for some time.

It may also be helpful to obtain information on customers’ source of funds and level of legitimate income, for example their occupation. This information may assist casinos with their assessment about whether a customer’s level of gambling is proportionate to their approximate income, or whether it is suspicious.

Verification

Information about customer identity must then be verified through documents, data and information which come from a reliable and independent source.

There are a number of ways that a person’s identity can be verified, including:

• obtaining or viewing original documents and ensuring that they are valid and genuine, by comparing them to published, authoritative guidance that outlines security features (which protect against forgeries)
• comparing the person presenting the document, or making the document available, to the document itself (for example, photograph comparison or comparison of information)
• conducting electronic verification through a scheme which properly establishes the customer’s identity, not just that the customer exists
• obtaining information from another person in the regulated sector (for example, from banks), that can be used in conjunction with other documents and information to prove a customer’s legitimacy over time, or positive or negative information.

No method of documentary or electronic verification can conclusively prove that the customer is who they claim to be

However, the Commission expects casinos to be reasonably satisfied, following appropriate inquiry, that customers are who they claim to be. Where confirmation of a customer’s identity is obtained from employees in the same casino group, the Regulations still require casino operators to verify this identity using an independent source. This is particularly relevant where the casino providing the confirmation is located in another jurisdiction.

Celebrity status

Some casinos have adopted the practice of allowing celebrities who are household names to by-pass the identification procedures agreed under the 2003 Regulations. Identification under these circumstances is not an issue. Verification may not be an issue owing to the easy availability of open source data and public knowledge that can be relied on as 'information from an independent and reliable source'. If such circumstances apply, then the casino must keep records of the celebrity’s presence at the casino, how their identity has been verified and, where necessary, the supporting records of their gaming.

The way in which CDD is conducted in relation to a customer’s celebrity status is a subjective decision and must be supported by adequate records, and, as with other cases, still requires the casino to be reasonably satisfied that the customer is who they say they are.

---

¹¹⁰An 'authoritative source' is an authority which has access to sufficient information from an issuing source to enable them to confirm the validity of the information and/or documentation provided by the customer to support their claimed identity. An issuing source is an authority that is responsible for the generation of data and/or documents that can be used as evidence of identity. Identity proofing and verification of an individual guidance published by the Government Digital Service (opens in new tab)

11 Electronic verification

Increasingly casinos use reliable electronic systems to help with verification. Some of these systems also have the advantage of assisting with the identification of PEPs. The amount of electronic information available about individuals will vary, depending on the extent of their electronic 'footprint'.

Electronic data sources can provide a wide range of confirmatory material without necessarily requiring the customer to produce documents. Electronic sources can be a convenient method of verification. They can be used either as the sole method of verification, or in combination with traditional document checks, on a risk basis.

For an electronic check to provide satisfactory evidence of identity on its own it must:

• use data from multiple sources, across time, and
• incorporate qualitative checks that assess the strength of the information supplied.

An electronic check that accesses data from a single source, for example, a single check against the electoral roll is not enough on its own to verify identity.

Where such sources are used for a credit check, the customer’s permission is required under the Data Protection Act 2018 (the Data Protection Act) (opens in a new tab). Credit checks can provide inexpensive information on which to assess a customer’s access to funds and to obtain a credit profile to match against spending patterns. For example, a criminal spending large amounts of criminal property would most likely not match their credit profile. A search for identity verification for AML and CTF purposes, however, leaves a different footprint on the customer’s electronic record, and the customer’s permission is not required, but they must be informed that this check is to take place. There are systems available that give typical financial and lifestyle profiles of people in a given postcode. Such systems do not amount to a credit check and do not require the use of personal information, but can provide helpful indicators of someone’s expected financial profile.

Some external electronic databases are accessible directly by casinos, but it is more likely they will be purchased from an independent third-party organisation. The size of the electronic 'footprint' in relation to the depth, breadth and quality of data, and the degree of corroboration of the data supplied by the customer may provide a useful basis for an assessment of the degree of confidence in the product.

A number of commercial agencies which access many data sources are accessible online by casino operators and may provide a composite and comprehensive level of electronic verification through a single interface. Such agencies use databases of both positive and negative information, and many also access high-risk alerts that utilise specific data sources to identify high-risk conditions, for example, known identity frauds or inclusion on a sanctions list.

Positive and negative information

Positive information relating to full name, current address and date of birth can prove that an individual exists, but some can offer a higher degree of confidence than others. Such information should include data from more robust sources. This may be a source that requires an individual to prove their identity, or address, in some way in order to be included, as opposed to one where no such proof is required.

12 Criteria for use of an electronic verification provider

Before using a commercial agency for electronic verification, casino operators should be satisfied that information supplied by the verification provider is considered to be sufficiently extensive, reliable and accurate.

This judgement may be assisted by considering whether the provider meets all the following criteria:

• it is recognised, through registration with the Information Commissioner’s Office (ICO) (opens in new tab), to store personal data
• it uses a range of positive information sources that can be called upon to link an applicant to both current and previous circumstances
• it accesses negative information sources, such as databases relating to identity fraud and deceased persons
• it accesses a wide range of alert data sources
• it has transparent processes that enable the operator to know what checks were carried out, what the results of these checks were, and what they mean in terms of how much certainty they give as to the identity of the subject.

In addition, a commercial agency should have processes that allow the enquirer to capture and store the information they used to verify identity. It is important that the process of electronic verification meets a standard level of confirmation before it can be relied on.

The standard level of confirmation in circumstances that do not give rise to concern or uncertainty is:

• one match on an individual’s full name, date of birth and current address
• a second match on an individual’s full name and either their current address or their date of birth.

Commercial agencies that provide electronic verification use various methods of displaying results – for example, by the number of documents checked or through scoring mechanisms. Casino operators should ensure that they understand the basis of the system they use, in order to be satisfied that the sources of the underlying data meet the required standard.

13 Documentary evidence

If verification is undertaken using documents, casino operators should usually rely upon documents issued by an authoritative source that can be assessed against official and published guidance on identity documents.

Original documents should be examined so that, as far as reasonably practicable, forgeries are not accepted. Casino operators should recognise that some documents are more easily forged than others. If suspicions are raised in relation to any document offered, operators should take whatever practical and proportionate steps are available to establish whether the document offered is a forgery or has been reported as lost or stolen. While the presentation of false documents does not, in itself, amount to money laundering, it may constitute an offence under the Fraud Act 2006 (opens in a new tab) or Identity Cards Act 2006 (opens in a new tab) and should, in appropriate circumstances, be reported to the police or the NCA.

Documentation purporting to offer evidence of identity may come from several sources

These documents differ in their integrity, reliability and independence. Some are issued after CDD on the holder of the document is carried out by the issuing authority. There is a broad hierarchy of documents.

Documents issued by government departments and agencies that contain a photograph may be considered reliable. In practical terms, for face-to-face verification conducted by non-remote casinos, production of a valid passport or photo card driving licence should enable most individuals to meet the identification requirement for AML/CTF purposes. These documents will also confirm either residential address or date of birth.

Alternatively, documents from an authoritative source without a photograph which incorporate the customer’s full name may be used, supported by a second document, which is issued by an authoritative source, or issued by a public sector body or authority. This second document must also include the customer’s full name and either their residential address or their date of birth.

The following sources may be useful for verification of UK-based customers:

• current signed passport
• birth certificate
• current photo card driving licence
• current EEA member state identity card
• current identity card issued by the Electoral Office for Northern Ireland
• residence permit issued by the Home Office
• firearms certificate or shotgun licence
• benefit book or original notification letter from the Department of Works and Pensions confirming the right to benefits
• council tax bill
• utility bill or statement that can, on a risk basis, be verified as true by the company that issued it, commonly by confirmation of a reference number, name and address, or a certificate from a utilities supplier confirming an arrangement to pay services on pre-payment terms
• bank, building society or credit union statement or passbook containing current address that can, on a risk basis, be verified as true by the company that issued it, commonly by confirmation of a reference number, name and address - bank or credit cards alone will not be sufficient as these do not provide either residential address or date of birth.

Wherever the following type of evidence is used, adopting a risk-based approach, you may consider confirming these sources as valid by checking with the issuing authority:

• confirmation from an electoral register that a person of that name lives at that address
• recent original mortgage statement from a recognised lender
• solicitor’s letter confirming recent house purchase or land registry confirmation of address
• local council or housing association rent card or tenancy agreement
• HMRC self-assessment statement or tax demand
• house or motor insurance certificate.

Customers who are not resident in the UK should be asked to produce their passport, national identity card or photo card driving licence. If the casino has concerns that the identity document presented by a customer is not genuine, they should contact the relevant embassy or consulate.

Confirmation of the customer’s address can be obtained from:

• an official overseas government source
• a reputable directory of addresses
• a person regulated for money laundering purposes in the country where the customer is resident (for example, a casino or bank) who confirms that the customer is known to them and lives or works at the overseas address supplied.

14 Politically exposed persons (PEPs)

Definition¹¹¹

A PEP is an individual who is entrusted with prominent public functions, other than middle-ranking or more junior officials, including the following individuals:

• heads of state, heads of government, ministers and deputy or assistant ministers
• members of parliament or of similar legislative bodies
• members of the governing bodies of political parties
• members of supreme courts, constitutional courts or other high-level judicial bodies whose decisions are not subject to further appeal, except in exceptional circumstances
• members of courts of auditors or of the boards of central banks
• ambassadors, chargés d’affaires and high-ranking officers in armed forces
• members of the administrative, management or supervisory bodies of state-owned enterprises
• directors, deputy directors and members of the board or equivalent function of an international organisation.¹¹²

The following individuals are also regarded as PEPs by virtue of their relationship or association with the individuals listed previously:

• family members of the individuals listed previously, including spouse, partner, children and their spouses or partners, and parents
• known close associates of the individuals listed previously, including individuals with whom joint beneficial ownership of a legal entity or legal arrangement is held, with whom there are close business relations, or who is a sole beneficial owner of a legal entity or arrangement set up for the benefit of the PEP.¹¹³

When deciding whether an individual is a known close associate of a PEP, casino operators need only consider information which is in their possession, or credible information which is publicly available.¹¹⁴

PEP status itself does not incriminate individuals or entities. It does, however, put a customer into a high-risk category.

Risk-based approach to PEPs

The nature and scope of a particular casino’s business will help to determine the likelihood of PEPs in their customer base, and whether the casino operator needs to consider screening all customers for this purpose.

Establishing whether individuals are PEPs is not always straightforward and can present difficulties. Where casino operators need to carry out specific checks, they may be able to rely on an internet search or consult relevant reports and databases on corruption risk published by specialised national, international, non-governmental and commercial organisations. Resources such as the Transparency International Corruption Perceptions Index (opens in new tab), which ranks approximately 150 countries according to their perceived level of corruption, may be helpful in assessing the risk. Another useful source of information is KnowYourCountry (opens in new tab). The International Monetary Fund, World Bank and some non-governmental organisations also publish relevant reports. If there is a need to conduct more thorough checks, or if there is a high likelihood of a casino operator having PEPs for customers, subscription to a specialist PEP database may be a valuable tool in assessing the risk.

New and existing customers may not initially meet the definition of a PEP, but that position may change over time. Equally, individuals who are initially identified as PEPs may cease to be PEPs. For example, the Regulations provide that casino operators must continue applying enhanced customer due diligence to PEPs for at least 12 months after they cease to hold a prominent public function.¹¹⁵ The casino operator should, as far as practicable, be alert to public information relating to possible changes in the status of its customers with regard to political exposure.

Although under the definition of a PEP an individual ceases to be so regarded after they have left office for 12 months, casino operators are encouraged to apply a risk-based approach in determining whether or when they should cease carrying out appropriately enhanced monitoring of transactions. In cases where the PEP presents a high risk of money laundering or terrorist financing, a longer period might be appropriate in order to ensure that the higher risks associated with the individual’s previous position have adequately abated.¹¹⁶

PEPs requirements

Casino operators are required, on a risk-sensitive basis, to:

• have in place appropriate risk management systems and procedures to determine whether a customer (or the beneficial owner of a customer) is a PEP, or a family member or known close associate of a PEP
• have approval from its senior management for establishing or continuing a business relationship with such persons
• take adequate measures to establish the source of wealth and source of funds which are involved in the proposed business relationship or transaction with such persons
• where a business relationship is entered into, conduct enhanced ongoing monitoring of the business relationship with such persons.¹¹⁷

Each casino operator’s policies and procedures should cover when and how customers will be checked for PEP status and how and when senior management approval will be sought and provided, and deal with how the customer will be dealt with if there is any delay to approval being provided by senior management.

The appropriateness of the risk management systems and procedures adopted must take account of:

• the money laundering and terrorist financing risk assessment that the casino operator has conducted
• the level of risk of money laundering or terrorist financing inherent in the operator's business
• the extent to which that risk would be increased by a business relationship with a PEP, or a family member or known close associate of a PEP
• any relevant information made available by the Commission.¹¹⁸

Where the casino operator has determined that a customer or potential customer is a PEP, or a family member or known close associate of a PEP, the operator must assess:

• the level of risk associated with that customer
• the extent of the enhanced due diligence measures to be applied in relation to that customer, taking into account any guidance issued by the Commission or any other appropriate body (and approved by HM Treasury), and any relevant information made available by the Commission.¹¹⁹

There is a hierarchy of risk for individual PEPs, where some PEPs have higher relative risk and others have lower relative risk. The measures taken for particular PEPs should therefore be informed by the relative risk attributed to the PEP, including consideration of the jurisdiction from which they originate. The Financial Conduct Authority (the FCA) has published guidance in relation to the treatment of PEPs and, while casino operators are not subject to the rules made by the FCA¹²⁰, they are advised to consult this guidance when considering the level of risk posed by a particular PEP. The guidance provides advice on who should be treated as a PEP, who should be treated as a family member or known close associate of a PEP, and the level of risk posed by particular PEPs, family members and close associates. Among other things, it recommends that only those individuals in the UK who hold truly prominent positions should be treated as PEPs, and not to apply the definition to local government, more junior members of the senior civil service or anyone other than the most senior military officials.¹²¹

However, this recommendation does not apply when dealing with PEPs from foreign jurisdictions. The FCA guidance also notes that a PEP entrusted with a prominent public function by the UK should be treated as lower risk, unless a regulated firm assesses that risk factors not linked to their position as a PEP mean that they pose a higher risk.

A casino operator who proposes to have, or to continue, a business relationship with a PEP, or a family member or known close associate of a PEP must, in addition to the enhanced customer due diligence measures described in the Enhanced customer due diligence and enhanced ongoing monitoring section:

• have approval from its senior management for establishing or continuing the business relationship with that person
• take adequate measures to establish the source of wealth and source of funds which are involved in the proposed business relationship or transactions with that person
• where the business relationship is entered into, conduct enhanced ongoing monitoring of the business relationship with that person.¹²²

Where an individual who was a PEP is no longer entrusted with a prominent public function, casino operators must continue to apply the requirements for PEPs:

• for a period of at least 12 months after the date on which the individual ceased to be entrusted with a public function
• or for a longer period that the casino operator considers appropriate to address the risks of money laundering or terrorist financing in relation to that individual.¹²³

When an individual who was a PEP is no longer entrusted with a prominent public function, casino operators are no longer required to apply enhanced customer due diligence measures to the family members or close associates of the PEP. The 12-month period referred to previously does not apply in this case.¹²⁴

---

¹¹¹See FCA guidance FG 17/6 The treatment of politically exposed persons for anti-money laundering purposes (PDF) (opens in new tab).
¹¹² Regulation 35(12) and (14). See details in relation to the treatment of PEPs
¹¹³ Regulation 35(12). See details in relation to the treatment of family members and known close associates of PEPs
¹¹⁴ Regulation 35(15).
¹¹⁵ Regulation 35(9)(a).
¹¹⁶ Regulation 35(9)(b).
¹¹⁷ Regulation 33(5).
¹¹⁸ Regulation 35(2).
¹¹⁹ Regulation 35(3) and (4).
¹²⁰ Regulation 48(1).
¹²¹ See the FCA guidance within this detailed guide.
¹²² Regulation 35(5).
¹²³ Regulation 35(9). This requirement does not apply to individuals who were no longer entrusted with a prominent public function before 26 June 2017 (Regulation 35(10).
¹²⁴ Regulation 35(11).

15 Simplified customer due diligence

A casino operator is permitted to apply simplified customer due diligence measures in relation to a particular business relationship or transaction if it determines that the business relationship or transaction presents a low degree of money laundering and terrorist financing risk, taking into account its money laundering and terrorist financing risk assessment, any relevant information made available by the Commission and the risk factors in the following paragraph headed 'Casino operators must take account of the following risk factors'¹²⁵

The casino operator’s risk assessment should identify what products, services, transactions, customers or countries present a low degree of money laundering and terrorist financing risk. Remote casinos operators should note that business relationships and transactions with its customers cannot be considered to present a low degree of money laundering and terrorist financing risk, if no safeguards are in place (see Enhanced customer due diligence and enhanced ongoing monitoring section.

When assessing whether there is a low degree of risk of money laundering and terrorist financing in a particular situation, and the extent of the simplified customer due diligence in that situation, casino operators must take account of the following risk factors, among other things.

In making an assessment of a low degree of risk, casino operators must bear in mind that the presence of one or more risk factors may not always indicate that there is a low risk of money laundering and terrorist financing in a particular situation.¹²⁷

Where a casino operator applies simplified due diligence measures

It must:

• continue to comply with the customer due diligence requirements, but it can adjust the extent, timing or type of the measures it undertakes to reflect the determination it has made under simplified customer due diligence in regard to the low degree of money laundering or terrorist financing risk associated with a particular business relationship or transaction, and
• carry out sufficient monitoring of any business relationships or transactions subject to simplified measures to enable it to detect any unusual or suspicious transactions.¹²⁸

A casino operator must discontinue applying simplified due diligence measures if:

• it doubts the veracity or accuracy of any documents or information previously obtained for the purposes of identification or verification
• its money laundering and terrorist financing risk assessment changes and it no longer considers that there is a low degree of risk of money laundering and terrorist financing
• it suspects money laundering or terrorist financing, or
• any of the high-risk situations or conditions outlined in enhanced customer due diligence measures apply.¹²⁹

---

¹²⁵ Regulation 37(1).
¹²⁶ Regulation 37(3).
¹²⁷ Regulation 37(4).
¹²⁸ Regulation 37(2).
¹²⁹ Regulation 37(8).

16 Reliance

A casino operator may rely on certain third parties to apply the required CDD measures, however, the operator remains liable for any failure to apply such measures.¹³⁰

The third parties which may be relied on are:

• other persons who are subject to the requirements of the Regulations (financial institutions, credit institutions, auditors, insolvency practitioners, external accountants, tax advisers, independent legal professionals, trust or company service providers, estate agents, high value dealers, and other casinos)
• persons who carry on business in a third country who are subject to requirements in relation to CDD and record keeping which are equivalent to those in the Directive, and are supervised for compliance with those requirements.¹³¹

A casino operator may not rely on a third party established in a high risk third country.¹³²

When a casino operator relies on a third party to apply CDD measures

It must:

• immediately obtain from the third party all the information needed to satisfy the requirements for the identification and verification of the customer, any beneficial owner and any person acting on behalf of the customer
• have an arrangement with the third party that enables the operator to obtain from the third party immediately on request copies of any identification and verification data and other relevant documentation on the identity of the customer, beneficial owner or any person acting on behalf of the customer
• require the third party to retain copies of such data and documents for a period of five years beginning on the date that the business relationship with the customer ended.¹³³

A casino operator will be treated as having complied with the requirements listed previously:

• if the operator is relying on information provided by a third party which is a member of the same group as the operator (for example, in the case of group companies with overseas casinos)
• if that group applies CDD measures, rules on record keeping and programmes against money laundering and terrorist financing in accordance with the Regulations, the Directive or rules having equivalent effect
• the effective implementation of these requirements is supervised at group level by an authority of an EEA state with responsibility for implementation of the Directive or by an equivalent authority of a third country.¹³⁴

A casino operator is permitted to apply CDD measures by means of an agent or an outsourcing service provider, provided that the arrangements between the operator and the agent or service provider make clear that the operator remains liable for any failure to apply the CDD measures.¹³⁵

In this context, an outsourcing service provider is a person who performs a process, service or activity on behalf of the casino operator and is not an employee of the operator.¹³⁶

We recommend also referring to our information on the purpose of this guidance which highlights the need for operators to consider the risks posed by third parties they contract with.

---

¹³⁰ Regulation 39(1).
¹³¹ Regulation 39(3).
¹³² Regulation 39(4) and 33(3).
¹³³ Regulation 39(2).
¹³⁴ Regulation 39(6).
¹³⁵ Regulation 39(7).
¹³⁶ Regulation 39(8).

17 Requirements to cease transactions or terminate relationship

Where a casino operator is unable to apply the required CDD measures in relation to a particular customer, the operator:

• must not carry out a transaction with or for the customer through a bank account
• must not establish a business relationship or carry out a transaction with the customer other than through a bank account
• must terminate any existing business relationship with the customer
• must consider whether they are required to make a report, or a further report, to the NCA.¹³⁷

Where the casino operator is required not to carry out a transaction with or for a customer through a bank account, this does not prevent money deposited in a customer's gambling account being repaid to the customer, provided that, where the operator is required to make a report to the NCA, the operator has a defence (appropriate consent) under POCA, or consent under the Terrorism Act (opens in a new tab), to the transaction.¹³⁸

Casinos must therefore have clear policies in place on how they will manage situations where they are unable to apply the CDD measures.

Requirements for remote casinos

Where remote casino operators are unable to complete or apply the required CDD measures¹³⁹ in relation to a particular customer at the point the CDD threshold for transactions¹⁴⁰ is reached, and are accordingly required to cease transactions or terminate the business relationship with the customer,¹⁴¹ they should adopt the following procedure:

• at the point where the threshold is reached, remote casino operators should put all funds owed to the customer into an account (or equivalent) from which no withdrawals can be made
• further deposits can be made to that account as long as they are also locked into it until CDD is completed
• bets can be made from the account, again providing any winnings are locked until CDD is completed
• once CDD is completed, the account can be unlocked and business continue as normal
• if CDD cannot be completed, then the operator must proceed in line with regulation 31(1)(c) and terminate the existing business relationship with the customer
• if funds are to be repaid, then the amount repaid should consist of all funds owed to the customer at the point that the threshold was reached, plus all deposits made at that point and thereafter
• funds should be refunded back to the originating account, and there should be appropriate risk mitigation. Where it is suspected that the funds are the proceeds of crime, remote casino operators should submit SARs or seek a defence (appropriate consent) before refunding any of the funds
• if the refund is to be completed back to another account (whether partially or completely), a risk assessment must be done that should take into account information such as: multiple destinations – is the customer requesting that the money be sent to several bank accounts? High-risk destination – is the customer requesting that the money be returned to a country where there is a significant money laundering or terrorist financing concern? Above €2,000 – is the amount above the threshold for CDD?
• there should be appropriate risk mitigation
• where it is known or suspected that the funds are the proceeds of crime, remote casino operators should submit SARs or seek a defence (appropriate consent) before refunding any of the funds
• there should be ongoing monitoring of the account and, if necessary, reporting of findings via relevant fraud monitoring services in the public and private sector.

The customer should be made fully aware of the procedures adopted by the remote casino operator when they first register with the operator so that there is no misunderstanding at a later stage.

---

¹³⁷ Regulation 31.
¹³⁸ Regulation 31(2).
¹³⁹ These measures are discussed in customer due diligence measures
¹⁴⁰ See customer due diligence requirements
¹⁴¹ In accordance with regulation 31(1).

18 List of persons subject to financial restrictions

The UK operates financial sanctions on persons and entities following their designation at the United Nations or in accordance with other international obligations. The UK also operates a domestic counter-terrorism regime, where the Government decides to impose financial restrictions on certain persons and entities. There are specific financial restrictions targeted at organisations and entities involved in terrorism and terrorist financing.

Financial restrictions in the UK are governed by the Sanctions and Anti-Money Laundering Act 2018¹⁴² and various regulations thereunder. The purpose of imposing financial restrictions is to restrict access to finance by designated persons and to prevent the diversion of funds to terrorism and terrorist purposes. In all circumstances where an asset freeze is imposed, it is unlawful to make payments to, or allow payments to be made to, designated persons.

There are prohibitions for carrying out certain activities or behaving in a certain way if financial sanctions apply. This will depend on the exact terms of the UK legislation which imposes the financial sanction in the given situation. Further information regarding the prohibitions can be found in OFSI's financial sanctions guidance and information on monetary penalties (opens in new tab).

OFSI has the power to grant licences exempting certain transactions from the financial restrictions

Requests to disapply the financial restrictions in relation to a designated person are considered by OFSI on a case-by-case basis to ensure that there is no risk of funds being diverted to otherwise restricted purposes.

How to apply for a licence

Contact OFSI using the following details. Further regime-specific guidance (opens in new tab) concerning licensing and compliance can be found in the OFSI and HM Treasury publication.

Casino operators need to have the necessary policies, procedures and controls in place to monitor financial transactions so that payments are not made to designated persons, thereby preventing breaches of the financial restrictions legislation. For manual checking, operators can register with the OFSI update service (directly or via a third party). If checking is automated, operators will need to ensure that the relevant software includes checks against the latest Consolidated List.

Contact OFSI

OFSI may also be contacted to provide guidance and to assist with any concerns regarding financial restrictions.

By email

ofsi@hmtreasury.gsi.gov.uk

By phone

020 7270 5454 (weekdays, 9am to 5pm)

In the event that a customer or a payee is identified as a designated person, payments must not proceed unless a licence is granted by OFSI, as this would be a breach of the financial restrictions. OFSI should be informed immediately and the transaction suspended pending their advice. No funds should be returned to the designated person. The operator may also need to consider whether there is an obligation to report to the NCA under POCA or the Terrorism Act.

Written reports can be made to OFSI via email.

Casino operators should consider the likelihood of sanctioned persons using the casino’s facilities, taking into account matters such as where the person is resident, and the local demographics of the casino and its customer base. Operators should bear in mind that sanctioned persons are not exclusively resident abroad but may also live and operate in the UK and use either a high-end casino or a small provincial casino.

Casino operators should also note that PEPs and financial sanctions cannot be conflated as the requirements in relation to each are different. The Regulations do not prohibit doing business with a PEP, whereas there is a prohibition on doing business with a person on the financial sanctions list, so the way in which casino operators manage the respective risks should be different.

---

¹⁴² Sanctions and Anti-Money Laundering Act 2018 (opens in new tab)

Record keeping

1 General legal and regulatory requirements

This chapter provides guidance on appropriate record-keeping procedures required by the Regulations. 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. These records are also important when the Commission is conducting an investigation for compliance purposes.

The casino operator’s record-keeping policy and procedure should cover records in the following areas:

• 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 or other material concerning possible money laundering, terrorist financing or proliferation financing 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
• employee training records
• internal and external SARs, including decisions and actions taken by the nominated officer
• contact between the nominated officer and law enforcement or the NCA, including records connected to requests for a defence (appropriate consent).

The policy and procedure for record keeping should also make provision for the retention of records held by an employee who leaves the business.

The record-keeping requirements for supporting records, that is, the records of ongoing transactions with a customer, are based on the nature of the relationship with that customer. There is either:

• no relationship, or
• a 'business relationship', depending on the circumstances.

2 Business relationships

A business relationship is a business, professional or commercial relationship between a casino operator and a customer which arises out of the business of the casino operator and is expected by the operator, at the time when the contact is established, to have an element of duration.¹⁴³ Casino operators are advised to interpret this definition widely.

A business relationship with a customer of a casino operator is likely to occur when, for example:

• a customer opens an account with the casino operator or becomes a member of a casino (when a membership scheme is operated by the casino), or
• a customer obtains a cheque cashing facility
• may occur when, for example: the casino starts tracking a customer's drop/win figures, other than to establish when the customer triggers the €2,000 threshold for CDD.

The previous list is not exhaustive and a casino operator will need to form its own view of when contact is established, or circumstances otherwise arise, with a customer from which it expects, or it could reasonably be inferred that it expects, that the relationship with the customer will have an element of duration. The Commission accepts that this may not necessarily be the case when a casino operator permits a customer to join a casino loyalty scheme.

Ongoing monitoring of business relationships is a requirement for casino operators, and includes scrutiny of transactions undertaken throughout the course of the relationship (including, where necessary, the source of funds) to ensure that the transactions are consistent with the casino’s knowledge of the customer, the customer’s business and risk profile.¹⁴⁴

As noted in the final paragraph of the ongoing monitoring section of this guidance, casinos are expected to approach this requirement on a risk-sensitive basis. Dependent on how frequently a casino forms 'business relationships' it may be good practice to apply ongoing monitoring more widely. Regular players should be the subject of closer scrutiny and their level of play should be assessed with reference to the information already known about them, and where necessary, additional information must be collected and retained about the source of their funds.

---

¹⁴³ Regulation 4(1).
¹⁴⁴ Regulation 28(11).

3 Other casino customers

4 Customer information

In relation to the evidence of a customer’s identity casino operators must keep a copy of any documents or information obtained to satisfy the CDD measures required under the Regulations.¹⁴⁵

There is a separate requirement in the Regulations to ensure that documents, data or information held by casinos are kept up to date.¹⁴⁶

A trigger event for refreshing and extending CDD may be if a customer returns to a casino after a period of non-attendance. Refreshing information about existing customers will ensure that matters such as change of address or a customer being appointed into a role which attracts PEP status, will be picked up.

Where documents verifying the identity of a customer are held in one casino premises they do not also need to be held in duplicate form in another premises in the same group. For the purposes of compliance with the Regulations, the whole group forms part of the same 'relevant person'. The records need to be accessible to all premises that have contact with the customer, the nominated officer and law enforcement. The Regulations accept that casino operators may have more than one casino premises or more than one remote casino site. It is sufficient for the operator to undertake identification and verification provided the information is available to each premises or site.

---

¹⁴⁵ Regulation 40(2).
¹⁴⁶ Regulation 28(11).

5 Supporting records (non-remote casinos)

The requirement to keep supporting records is linked to 'business relationships', which is defined in the Regulations¹⁴⁷ and the extent and nature of the records created. In many casinos, customers (regardless of whether or not they have formed a business relationship) purchase chips with cash at gaming tables where, in low risk situations, no records are created and therefore are not available to be kept.

The Commission expects casino operators to use reasonable endeavours to create and keep supporting records and to make it clear in their policies, procedures and controls what records will be created in light of the known spending patterns and the assessed money laundering, terrorist financing and proliferation financing risks at each premises.

Some casinos undertake a process at the end of each business day to count the total drop (cash used to purchase chips) to compare against the total amount recorded through tracking individual customer spend. The difference between the two figures is the amount of drop that is not attributable to particular customers. This in turn can be calculated against known attendance figures and the number of customers tracked to give an average amount of money used to purchase chips per customer that has not been tracked, and therefore without supporting records. Where this process is used, it should be the subject of ongoing risk assessment for each premises and the records created during the process should also be retained.

Any casino operator devising its record-keeping policy and procedure should decide how its business fits within the definition of 'business relationship'. The variation in the record-keeping requirements for different circumstances illustrates the flexibility available to casinos which allows them to focus their resources on situations with higher money laundering or terrorist financing risk.

For the purposes of supporting records, the Commission takes the view that, in most cases, this will consist of records covering the drop/win figures, subject to the requirements outlines for other casino customers for each customer. There is no requirement to keep detailed records for each customer for each table or game for AML purposes. However, HMRC may require casino operators to maintain records for each table or game, but not broken down by each customer’s transactions.

---

¹⁴⁷ Regulations 3 and 4.

6 Supporting records (remote casinos)

Remote casinos will, by the nature of their business, generate detailed records of all transactions with each customer but, for the purposes of the record-keeping requirements, it is sufficient to retain the deposit and withdrawal figures for each named customer.

7 Supporting records (gaming machines)

Cash-in with cash-out gaming machines do not produce any supporting records that can be attributed to a customer. They do generate overall cash-in and cash-out data that must be retained by the casino. However, 'ticket in, ticket out' (TITO) and 'smart card' technology may mean that machines produce supporting records that can be attributed to a customer who falls within the record-keeping requirements, in which case such records must be retained in accordance with the Regulations.

In designing monitoring arrangements, it is important that appropriate account be taken of the frequency, volume and size of transactions with customers, in the context of the assessed customer risk.

Monitoring is not a mechanical process and does not necessarily require sophisticated electronic systems. The scope and complexity of the process will be influenced by the casino operator’s business activities, and whether the operator is large or small. The key elements of any system are having up-to-date customer information, on the basis of which it will be possible to spot the unusual and ask pertinent questions to elicit the reasons for unusual transactions or activities, in order to judge whether they may represent something suspicious.

8 Retention period

Records of identification and verification of customers must be kept for a period of five years after the business relationship with the customer has ended, for example where the customer closes their gambling account with the operator or ceases to visit or use the casino.¹⁴⁸

Records of internal and external reports on suspicious activity should be retained for five years from when the report was made.

---

¹⁴⁸ Regulation 40(3).
¹⁴⁹ Regulation 40(3).
¹⁵⁰ Regulation 40(5).

9 Form in which records are to be kept

Most casino operators have record-keeping procedures which they keep under review, and will seek to reduce the volume and density of records which have to be stored, whilst still complying with statutory requirements. Retention may therefore be:

• by way of original documents
• by way of photocopies of original documents
• on microfilm
• in scanned form
• in computerised or electronic form.

Records relating to ongoing investigations should, where possible, be retained until the relevant law enforcement agency has confirmed that the case has been concluded.

Where the record-keeping obligations under the Regulations are not observed, an operator or person is open to prosecution and sanctions, including imprisonment for up to two years and/or a fine, or regulatory censure.¹⁵¹

---

¹⁵¹ Regulation 83(1).

10 Data protection

Any personal data obtained by casino operators for the purposes of the Regulations may only be processed for the purposes of preventing money laundering, terrorist financing or proliferation financing.¹⁵²

---

¹⁵² Regulation 41(1).
¹⁵³ Regulation 41(3).
¹⁵⁴ Regulation 41(6).

Suspicious activities and reporting

1 Introduction

Employees in casinos are required to make a report in respect of information that comes to them in the course of their 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, including criminal spend, or attempting to launder money or finance terrorism. In this guidance, these obligations are collectively referred to as 'grounds for knowledge or suspicion'.

In order to provide a framework within which suspicion reports may be raised and considered:

• each casino operator must ensure that any employee reports to the operator’s nominated officer where they have grounds for knowledge or suspicion that a person or customer is engaged in money laundering or terrorist financing
• the operator’s nominated officer must consider each such report, and determine whether it gives grounds for knowledge or suspicion
• the operator should ensure that employees are appropriately trained in their obligations, and in the requirements for making reports to their nominated officer.

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 POCA, the nominated officer is required to make a report to the NCA as soon as is practicable if he has grounds for suspicion that another person, whether or not a customer, is engaged in money laundering. Under the the Terrorism Act (opens in a new tab), similar conditions apply in relation to disclosure where there are grounds for suspicion of terrorist financing.

2 What is meant by knowledge and suspicion?

In the context of POCA, knowledge means actual knowledge. Having knowledge means actually knowing something to be true. In a criminal court, it must be proved that the individual in fact knew that a person was engaged in money laundering. Knowledge can be inferred from the surrounding circumstances, so, for example, a failure to ask obvious questions may be relied upon by a jury to infer knowledge.¹⁵⁵

The knowledge must, however, have come to the casino operator (or to the employee) in the course of casino business or (in the case of a nominated officer) as a consequence of a disclosure under section 330 of POCA (opens in a new tab). Information that comes to the casino operator or employee in other circumstances does not come within the scope of the regulated sector obligation to make a report. This does not preclude a report being made should the operator or employees choose to do so. Employees may also be obliged to make a report by other parts of the Act. Further information can be found in Part 7 of POCA (opens in a new tab).¹⁵⁶

There is thus no requirement for the suspicion to be clear or firmly grounded on specific facts, but there must be a degree of satisfaction, not necessarily amounting to belief but at least extending beyond mere speculation, that an event has occurred or not.

Whether a person holds a suspicion or not is a subjective test. If a person thinks a transaction is suspicious, they are not required to know the exact nature of the criminal offence or that particular funds are definitely those arising from the crime. The person may have noticed something unusual or unexpected and, after making enquiries, the facts do not seem normal or make commercial or financial sense. It is not necessary to have evidence that money laundering is taking place to have suspicion.

A transaction that appears to be unusual is not necessarily suspicious

Many customers will, for perfectly legitimate reasons, have an erratic pattern of gambling transactions or account activity. Even customers with a steady and predictable gambling profile will have periodic transactions that are unusual for them. So, an unusual transaction may only be the basis for further enquiry, which may in turn require judgement as to whether the transaction or activity is suspicious. A transaction or activity may not be suspicious at the time, but if suspicions are raised later, an obligation to report the activity then arises. Likewise, if concern escalates following further enquiries, it is reasonable to conclude that the transaction is suspicious and will need to be reported to the NCA.

Unusual patterns of gambling, including the spending of particularly large amounts of money in relation to the casino or customer’s profile, should receive attention, but unusual behaviour will not necessarily lead to grounds for knowledge or suspicion of money laundering, or the making of a report to the NCA. The nominated officer is required to assess all of the circumstances and, in some cases, it may be helpful to ask the customer or others more questions. The choice depends on what is already known about the customer and the transaction, and how easy it is to make further enquiries.

In order for either an internal or external report to be made it is not necessary to know or to establish the exact nature of any underlying criminal offence, or that the particular funds or property were definitely those arising from a crime. Furthermore, it is not necessary to await conviction of a customer for money laundering or other criminal offences in order to have suspicion that money laundering has taken place.

---

¹⁵⁵ Refer to Baden v Societe Generale pour Favouriser le Developpement du Commerce et de l'Industrie en France [1983] BCLC 325.
¹⁵⁶ Part 7 of POCA (opens in a new tab).

3 What is meant by reasonable grounds to know or suspect?

In addition to establishing a criminal offence relating to failing to report when there is suspicion or actual knowledge of money laundering, POCA creates criminal liability for failing to disclose information when reasonable grounds exist for knowing or suspecting that a person is engaged in money laundering or terrorist financing.

This lower test, which introduces an objective test of suspicion, applies to all businesses covered by the Regulations, including remote and non-remote casinos. The test would likely be met when there are demonstrated to be facts or circumstances, known to the employee in the course of business, from which a reasonable person engaged in a casino business would have inferred knowledge, or formed a suspicion, that another person was engaged in money laundering or terrorist financing.

To defend themselves against a charge that they failed to make a report when the objective test of suspicion has been satisfied, employees within remote and non-remote casinos would need to be able to demonstrate that they took reasonable steps in the particular circumstances (and in the context of a risk-based approach) to conduct the appropriate level of CDD.

It is important to bear in mind that, in practice, a court will be deciding, with the benefit of hindsight, whether the objective test was met.

4 What constitutes suspicious activity?

There are numerous things that can make someone either know or suspect that they are dealing with the proceeds of crime. Some examples of how suspicions may be raised are listed as follows, although this is not an exhaustive list and there may be other circumstances which raise suspicion.

It is important to note that, once knowledge or suspicion of criminal spend is linked to a customer in one area of the business (for example, table games), it is good practice to monitor the customer’s activity in other areas of the business (for example, gaming machine play).

5 Internal reporting

Employees of a casino operator have a legal defence if they report to the nominated officer where they have grounds for knowledge or suspicion of money laundering or terrorist financing. All casino operators therefore need to ensure that all relevant employees know they should report suspicions to their nominated officer. Internal reports to a nominated officer, and reports made by a nominated officer to the NCA, must be made as soon as is practicable.

All suspicions reported to the nominated officer should be documented or electronically recorded

The report should include full details of the customer who is the subject of concern and as full a statement as possible of the information giving rise to the grounds for knowledge or suspicion of money laundering or terrorist financing. All internal enquiries made in relation to the report should also be documented or electronically recorded. This information may be required to supplement the initial report or as evidence of good practice and best endeavours if, at some future date, there is an investigation by a law enforcement agency or the Commission.

Once an employee has properly reported their suspicion to the nominated officer, or to an individual to whom the nominated officer has delegated the responsibility to receive such internal reports, they have satisfied their statutory obligation.

6 Evaluation and determination by the nominated officer

The casino operator’s nominated officer must consider each report and determine whether it gives rise to grounds for knowledge or suspicion. The operator must permit the nominated officer to have access to any information in the operator’s possession, including CDD information, that could be relevant. The nominated officer may also require further information to be obtained from the customer, if necessary. Any approach to the customer should be made sensitively and preferably by someone already known to the customer, to minimise the risk of alerting the customer or an intermediary that a disclosure to the NCA is being considered.

If the nominated officer decides not to make a report to the NCA, the reasons for not doing so should be clearly documented or electronically recorded and retained. These records should be kept separately by the nominated officer in order that the information therein is not disclosed accidentally.

It should be noted that the submission of a report to the NCA is not intended to be used as a way to obtain information from law enforcement in order to assist the nominated officer in deciding whether to continue with the business relationship with the customer, nor should the absence of a response or feedback from the NCA be taken to imply that the casino operator should continue with the business relationship until adverse information about the customer is received from the NCA or other law enforcement agency.

7 External reporting

To avoid committing a failure to report offence, the nominated officer must make a disclosure to the NCA where he decides that a report gives rise to grounds for knowledge or suspicion. The national reception point for the disclosure of knowledge and suspicions, and for seeking a defence (consent) to proceed with the transaction or activity, is the UK Financial Intelligence Unit (UKFIU) within the NCA.

The nominated officer must report to the NCA any transaction or activity that, after their evaluation, they know or suspect, or have reasonable grounds to know or suspect, may be linked to money laundering or terrorist financing. Such reports must be made as soon as is practicable after the information comes to the nominated officer.

In addition, depending on the circumstances, a casino operator being served with a court order in relation to a customer may have cause for suspicion, or reasonable grounds for suspicion, in relation to that customer. In such an event, the nominated officer should review the information that is held about that customer in order to determine whether or not such grounds for suspicion exist and, if necessary, make a report to the NCA. Where the nominated officer decides not to make a report to the NCA, the reasons for not doing so should be clearly recorded and retained.

8 Submission of suspicious activity reports

The NCA accepts the submission of SARs¹⁵⁷ in three main ways:

Casino operators should include in each SAR as much relevant information about the customer, transaction or activity that it has in its records. The NCA has published a glossary of terms which they prefer operators to use when completing SARs.¹⁵⁸ This will assist in consideration of the report by the NCA.

Casino operators should ensure that they check all the facts they have about the customer and include all relevant information when submitting a SAR

This may include the following:

• Do the staff know the customer’s identity?
• Is a physical description of the customer available?
• Has the customer provided any records that will assist in identifying him, for example credit or debit card details?
• Has the customer ever self-excluded?
• What are the customer’s product preferences, and does he hold other gambling accounts (for example, prefers casino gaming, but also uses online gambling facilities)?

In order that an informed overview of the situation may be maintained, all contact between the casino operator and law enforcement agencies should be controlled through, or reported back to, the nominated officer or a deputy acting in the absence of the nominated officer. The NCA may apply to the magistrates’ court (or, in Scotland, the sheriff) for an order (a further information order), following the submission of a SAR, requiring the nominated officer to provide more information in respect of the SAR.¹⁵⁹ Law enforcement agencies may also apply for a disclosure order requiring any person considered to have information relevant to an investigation to answer questions, provide information or to produce documents.¹⁶⁰

POCA also makes provision for the voluntary sharing of information between persons in the regulated sector when deciding whether to submit a SAR, and joint SARs by persons in the regulated sector, subject to certain limitations. The exchange of information in these circumstances is protected from breaching any confidentiality obligations or other restrictions.¹⁶¹

---

¹⁵⁷ Remote casino operators, particularly those based in a foreign jurisdiction, should consult the Commission's advice note on Anti-money laundering: Suspicious activity reporting requirements for remote operators (PDF). It is intended to assist remote operators in determining to which body or Financial Intelligence Unit (FIU) known or suspected money laundering activity should be reported, and the circumstances in which a defence (appropriate consent) should be sought.
¹⁵⁸ NCA - Suspicious Activity Reports (opens in a new tab)
¹⁵⁹ Section 339ZH (opens in a new tab) of POCA.
¹⁶⁰ Section 357 (opens in a new tab) of POCA.
¹⁶¹ Sections 339ZB (opens in a new tab) to 339ZG (opens in a new tab) of POCA.

9 Requesting a defence

If casino operators handle any proceeds of crime, they may commit one of the principal money laundering offences in POCA or the Terrorism Act (opens in a new tab). However, if the nominated officer submits a SAR to the NCA, this can provide a defence. There is a statutory mechanism which allows the NCA either to grant or to refuse the 'prohibited act' going ahead, or to prevent the suspected money laundering going ahead.¹⁶² This statutory mechanism is called 'appropriate consent' and is referred to by the NCA as Requesting a defence from the NCA under POCA and TACT.¹⁶³

The decision whether or not to obtain a defence (appropriate consent) will arise in the following scenarios:

• concealing, disguising, converting, transferring or removing criminal property¹⁶⁴
• facilitating the acquisition, retention, use or control of criminal property by, or on behalf of, another person¹⁶⁵
• acquisition, use or possession of criminal property¹⁶⁶.

These are referred to as 'prohibited acts'.

In any of these scenarios, casino operators will have two choices

They may choose:

• not to go ahead with the activity in question
• or they may choose to proceed.

A decision to proceed will mean that the operator may be committing a money laundering offence. However, if they have made an authorised disclosure and have obtained a defence (appropriate consent), they will not be committing an offence.

Nominated officers need to consider how they will approach their reporting obligations and consider:

• the timing of the report(s) – particularly second or subsequent reports
• whether the casino operator wishes to continue to do business with the customer while awaiting a defence (appropriate consent).

A nominated officer, police constable, NCA employee or customs officer can give a person (which may include, for example, a casino employee) actual 'appropriate consent' to a suspect transaction proceeding.¹⁶⁷ However, it should be noted that the NCA is the only body able to issue formal notification of a defence (consent) by means of an official NCA letter, which the nominated officer can then retain for their records.

Alternatively, a person will be treated as having appropriate consent if notice is given to a police constable or customs officer (but not the nominated officer) and either:

• consent is not refused within seven working days (beginning with the day after the notice is given)
• if consent is refused and following such refusal, the 'moratorium period' (31 calendar days starting with the day on which the person receives notice that consent to the doing of the act is refused) has expired, see extending the moratorium period.¹⁶⁸

Although notice can be given to a constable or customs officer, there is a need to ensure that the practices of all law enforcement agencies are consistent in this area. Therefore, the NCA operates as the national centre for all SARs and for the issue of decisions concerning the granting or refusal of a defence (appropriate consent). To avoid confusion requests for a defence (consent) should be routed through the NCA. See applying for a defence for more detail.

Extending the moratorium period

Casino operators should be aware that the NCA and other authorities, such as the FCA and Serious Fraud Office, can apply to the Crown Court (or, in Scotland, the sheriff) for an order to extend the moratorium period for a further 31 days. An order can be given on up to six occasions which allows the moratorium period to be extended for a maximum period of 186 days in total. To grant an order for an extension, in each case the Court must be satisfied that the NCA or other authority’s investigation is being carried out "diligently and expeditiously", additional time is needed to complete the investigation and an extension would be reasonable in the circumstances.¹⁶⁹

However, POCA provides that a nominated officer must not give appropriate consent unless he has himself already made a disclosure to an authorised officer of the NCA and, either:

• the NCA employee has provided a defence (consented to the transaction)
• a defence (consent) is not refused within seven working days (beginning with the day after the notice is given)
• if a defence (consent) is refused and following such refusal, the 'moratorium period' (31 calendar days starting with the day on which the person receives notice that consent to the doing of the act is refused) has expired, see extending the moratorium period¹⁷⁰

Reporting suspicious activity before or reporting after the event are not equal options which a casino operator can choose between, and retrospective reporting is unlikely to be seen in the same light as reporting prior to the event. A report made after money laundering has already taken place will only be a legal defence if there was a 'reasonable excuse' for failing to make the report before the money laundering took place.¹⁷¹ Where a customer request is received prior to a transaction or activity taking place, or arrangements being put in place (for example, where a customer requests the opening of a gambling account), and there is knowledge or suspicion, or reasonable grounds for suspicion, that the transaction, arrangements or the funds/property involved may relate to money laundering, a SAR must be submitted to the NCA and a defence (consent) sought to proceed with that transaction or activity. In such circumstances, it is an offence for a nominated officer to agree to a transaction or activity going ahead within the seven working day notice period from the working day following the date of disclosure, unless the NCA provides a defence (gives consent).¹⁷²

The defence (consent) provisions can only apply where there is prior notice to the NCA of the transaction or activity

The NCA cannot provide a defence (consent) after the transaction or activity has occurred. A defence (consent) request which is received after the transaction or activity has taken place will therefore be dealt with as an ordinary SAR.

In the casino environment, business is often conducted out of normal office hours. In addition, gambling transactions may sometimes be more 'immediate' than, for example, depositing funds into a bank account where the funds may be withdrawn at a later date. In these circumstances it may sometimes not be feasible or practical to obtain a defence (appropriate consent) prior to or during a transaction. Knowledge or suspicion of money laundering or terrorist financing may be triggered after a customer has completed all the stages of a gambling transaction (bought in, played and then cashed out). Under those circumstances, it may be reasonable to report after the transaction. However, the defence of 'reasonable excuse' when reporting after the transaction is untested by case law and should be considered on a case-by-case basis.¹⁷³ Where the relationship with the customer is expected to have an element of duration and involves numerous transactions, it is advisable to seek a defence (consent) prior to transacting with the customer.

Policies, procedures and controls

Casinos should include in their policies, procedures and controls details on how they will manage circumstances where there is knowledge or suspicion of money laundering or terrorist financing. If knowledge or suspicion is present, particularly if this occurs out of normal office hours, there must be a mechanism for involvement of the senior manager on duty and contact with the nominated officer as soon as is practicable. If the circumstances amount to reasonable grounds to suspect, then reporting the matter to the nominated officer should be sufficient, and for the nominated officer to receive the matter at the earliest practicable opportunity.

The nominated officer will need to think very carefully about whether or not to continue to do business with the suspected customer. Relevant considerations should be the potential commission of criminal offences under POCA or the Terrorism Act (opens in a new tab), as well as potential damage to business reputation and other commercial factors.

In the case of repeated SAR submissions on the same customer, it is the Commission’s view that this is not a route by which operators can guarantee a reporting defence retrospectively. If patterns of gambling lead to an increasing level of suspicion of money laundering, or to actual knowledge of money laundering, operators must seriously consider whether they wish to allow the customer to continue using their gambling facilities. Casino operators are, of course, free to terminate their business relationships if they wish and, provided this is handled appropriately, there will be no risk of 'tipping off' or prejudicing an investigation. However, operators should think about liaising with the law enforcement investigating officer to consider whether it is likely that termination of the business relationship would alert the customer or prejudice an investigation in any other way.

How customers suspected of money laundering or terrorist financing will be dealt with is an important area of risk management for all casino operators

They should deal with the issue in their policies, procedures and controls. As all operators are at risk of committing the principal offences, it is advisable to consider these issues carefully before they arise in practice.

For example, the casino operator may consider one transaction to be suspicious and report it to the NCA accordingly, but may be less concerned that all of an individual’s future transactions are suspicious. In these circumstances, each transaction should be considered on a case-by-case basis and reports made accordingly, and a defence (appropriate consent) sought where necessary. Where subsequent reports are also made after actual or suspected money laundering or terrorist financing has taken place or appears to have taken place, the nominated officer is encouraged to keep records about why reporting was delayed, and about why a defence (appropriate consent) was not requested before the suspected money laundering or terrorist financing took place.

---

¹⁶² Section 335 (opens in a new tab) of POCA.
¹⁶³ NCA - Suspicious Activity Reports (opens in a new tab)
¹⁶⁴ Section 327 (opens in a new tab) of POCA.
¹⁶⁵ Section 328 (opens in a new tab) of POCA.
¹⁶⁶ Section 329 (opens in a new tab) of POCA.
¹⁶⁷ Section 335(1) (opens in a new tab) of POCA.
¹⁶⁸ Section 335(2) (opens in a new tab) of POCA.
¹⁶⁹ Section 336A (opens in a new tab) of POCA.
¹⁷⁰ Section 336 (opens in a new tab) of POCA.
¹⁷¹ Section 327(2)(b) (opens in a new tab) of POCA.
¹⁷² Section 336(3) (opens in a new tab) and (4) (opens in a new tab) of POCA.
¹⁷³ Section 327(2)(b) (opens in a new tab) of POCA.

10 Applying for a defence

Where SAR Online is used and a defence (appropriate consent) is needed, this can be done by ticking the 'consent requested' box. Alternatively, requests can be faxed to the NCA UKFIU Consent Desk (see the NCA website (opens in a new tab). You are advised to make it explicit in your report that you are seeking a defence (consent) from the NCA.

Requests must be for a specified activity (or specified series of activities) and should not be open-ended, such as seeking a defence (consent) to 'handle all business dealings or transactions' relating to the subject of the request or the relevant account.

The SAR requesting a defence (appropriate consent) should set out concisely:

• who is involved
• what and where the criminal property is, and its value
• when and how the circumstances arose and are planned to happen
• why you have knowledge or are suspicious.

The UKFIU Consent Desk applies the criteria set out in the Home Office Circular 029/2008 Proceeds of Crime Act 2002: Obligations to report money laundering – the consent regime¹⁷⁴ to each request for a defence (consent), carry out the necessary internal enquiries, and will contact the appropriate law enforcement agency, where necessary, for a consent recommendation. Once the NCA’s decision has been reached, the disclosing nominated officer will be informed of the decision by telephone, and be given a reference number, which should be recorded. A formal letter from the NCA will follow.

Home Office Circular 029/2008 contains guidance on the operation of the consent regime in POCA. It was issued to ensure consistency of practice on the part of law enforcement in considering requests for consent under Part 7 (opens in a new tab) of POCA. This was in response to concerns from the financial services industry and other sectors and professions that decisions should be taken in an effective and proportionate way, with due engagement with all participants. The circular was formulated in agreement with key partner agencies and sets out the high-level principles by which the law enforcement agencies should make decisions on consent, and how these principles should be applied.

Although POCA provides that consent can be granted by a constable (which includes authorised NCA officers) or a customs officer, there is a recognised need to ensure that the practices of all law enforcement agencies are consistent in this area. Therefore, as a result of the circular, the NCA operates as the national centre for all authorised disclosures and for the issue of decisions concerning the granting or refusal of a defence (consent). To avoid confusion those making requests for a defence (consent) should route requests through the NCA. The decision-making process will consist of a collaborative effort between the NCA and the other law enforcement agencies, with the latter providing a recommendation to the NCA. While the final decision will be taken by the NCA, in most cases it is likely to be based largely on the recommendation provided by the interested law enforcement agency.

Timescales for a decision

All requests for a defence (consent) are dealt with by the NCA on a case-by-case basis. It may take the maximum of seven working days to deal with a defence (consent) request, however, in most cases the NCA is able to respond to requests for a defence (consent) within three days.¹⁷⁵ Nominated officers should take this into account when deciding whether it is practical and reasonable to request a defence (consent) prior to the transaction or activity, rather than making a report after the transaction or activity.

In the event that the NCA does not refuse a request for a defence (consent) within seven working days (the notice period) following the working day after the report is made, the casino operator may continue to transact with the customer. However, if the request for a defence (consent) is refused within that period, the NCA can prevent the transaction or activity for a further 31 calendar days (the moratorium period) from the day the request for a defence (consent) is refused.

Once a matter has been appropriately reported to the NCA, the decision to proceed or not to proceed with a transaction or arrangement remains with the casino operator. Even if a defence (consent) is obtained from the NCA, the operator is not obliged to proceed with the transaction or arrangement.

Casino operators should note that a defence (consent) only applies in relation to individual prohibited acts and cannot provide cover to deal with a particular customer. Any subsequent activity will require separate consideration and, if necessary, separate requests for a defence from the NCA. Where a single money laundering offence consists of a course of conduct, the NCA may give consent for a series of similar transactions over a specified period. In cases where there is a range of different money laundering offences that may be committed, such as acquiring (section 329(1)(a) of POCA) (opens in a new window) and transferring (section 327(1)(d) of POCA) (opens in a new window) criminal property, the NCA may give a single consent to that person being concerned in an arrangement to facilitate acquisition and use under section 328(1) (opens in a new tab) of POCA.

Granting consent

The NCA’s ability to grant a defence (consent) in such circumstances will depend on having sufficient detail about the future course of activity or repeated transactions in order to make an informed decision. This is considered on a case-by-case basis. It is not possible for the NCA to give 'blanket' consent for a reporter to carry out all activity and transactions on a suspicious account, individual or arrangement.

The NCA cannot give advice to nominated officers and casino operators in relation to the specific circumstances where SARs should be submitted or the terms for requesting a defence (appropriate consent).

---

¹⁷⁴ Home Office Circular 029/2008 Proceeds of Crime Act 2002: Obligations to report money laundering – the consent regime (opens in a new tab).
¹⁷⁵ NCA Annual Report.
¹⁷⁶ Available from the NCA: Requesting a defence from the NCA under POCA and TACT.

11 Suspicious activity reporting requirements for remote casinos

For the purposes of this section, 'British customer' is inferred to mean a customer who is physically located in Great Britain when they use gambling facilities provided in reliance on a remote casino licence issued by the Commission, regardless of their usual residential address.

'Non-British customer' on the other hand means a customer who is not physically located in Great Britain when they use gambling facilities provided in reliance on a remote casino licence issued by the Commission, regardless of their usual residential address.

The Commission is aware that some remote casino operators not physically located in Great Britain may be required by local law to report instances of known or suspected money laundering activity by British customers to the FIU of the jurisdiction in which the operator is situated, rather than the NCA.

Suspicious activity reporting

Where any of the remote gambling equipment used in a transaction which is known or suspected to involve money laundering is located in Great Britain (as well as equipment located in Northern Ireland), the known or suspected money laundering activity must be reported to the NCA. Operators must provide the Commission with the unique reference numbers allocated by the UKFIU of the NCA, for reports submitted by them, within five working days of receipt thereof, in accordance with licence condition 15.2.1.

Where the remote gambling equipment used in a transaction which is known or suspected to involve money laundering is located outside Great Britain, but involves a British customer, and the jurisdiction in which the equipment is located is not a member of the Egmont Group (or the jurisdiction does not include gambling businesses under AML or CTF legislation, or prohibits online gambling), the known or suspected money laundering activity must be reported to the NCA. Operators must provide the Commission with the unique reference numbers allocated by the UKFIU of the NCA, for reports submitted by them, within five working days of receipt thereof, in accordance with licence condition 15.2.1.

In all other cases, the known or suspected money laundering activity must be reported to the FIU of the jurisdiction in which the remote gambling equipment used in a transaction, which is known or suspected to involve money laundering, is located. The relevant report will then be shared with the NCA through the Egmont Group, where appropriate.¹⁷⁷ Where circumstances permit, operators should provide the Commission with the unique reference numbers allocated by the applicable FIU, for reports concerning British customers, within five days of receipt thereof.

These reporting requirements are summarised in the following table.

Reporting requirements

Customer	Location of remote gambling equipment	Member of Egmont Group?	Report suspicious activity to	Unique reference numbers (URNs)
British or Non-British customer*	Britain** or Northern Ireland	Yes	NCA	Operators should provide the Commission with the URNs allocated by the NCA within five working days
British customer*	Outside Britain**	No Yes, but domestic FIU does not receive gambling SARs Country prohibits online gambling	NCA	Operators should provide the Commission with the URNs allocated by the NCA within five working days
British or Non-British customer*	Outside Britain**	Yes	Domestic FIU***	Where circumstances permit, operators should provide the Commission with the URNs allocated by the FIU, for reports concerning British customers, within five working days

* See suspicious activity reporting requirements for remote casinos

** Britain means England, Scotland and Wales

*** In the case of operators where the remote gambling equipment used in a transaction which is known or suspected to involve money laundering is located in Gibraltar and involves a British customer, known or suspected money laundering activity must be reported to the Gibraltar FIU and the UKFIU.

Applying for a defence

Where remote casino operators wish to make use of the defences provided by sections 327(2)(a) (opens in a new tab), 328(2)(a) (opens in a new tab) and 329(2)(a) (opens in a new tab) of POCA where they believe that, by proceeding with a transaction with a British customer, they will be committing a prohibited act, they should apply for a defence (appropriate consent), in accordance with section 335 (opens in a new tab) of POCA, from the NCA.¹⁷⁸

---

¹⁷⁷ Sections 327 (opens in a new tab), 328 (opens in a new tab) and 329 (opens in a new tab) of the Proceeds of Crime Act. Note that in the case of operators where the remote gambling equipment used in a transaction which is known or suspected to involve money laundering is located in Gibraltar and involves a British customer, known or suspected money laundering activity must be reported to the Gibraltar FIU and the UKFIU.
¹⁷⁸ See applying for a defence

12 Failing to report

POCA and the Terrorism Act (opens in a new tab) create offences of failing to report suspicious activity¹⁷⁹ . Where a person fails to comply with the obligations to make disclosures to a nominated officer and/or 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.

For all failure to disclose offences under POCA, it will be necessary to prove that the person or nominated officer either:

• knows the identity of the money launderer or the whereabouts of the laundered property
• believes the information on which the suspicion was based may assist in identifying the money launderer or the whereabouts of the laundered property.¹⁸⁰

Casino operators and nominated officers, therefore, must comply with the reporting requirements imposed on them by POCA and the Terrorism Act (opens in a new tab).

---

¹⁷⁹Sections 330 (opens in a new window) and 331 (opens in a new window) of POCA, and section 19 (opens in a new tab) of the Terrorism Act.
¹⁸⁰Sections 330(3A) (opens in a new window) and 331(3A) (opens in a new window) of POCA.

13 After a report has been made

When an enquiry is under investigation, the investigating officer may contact the nominated officer to ensure that they have all the relevant information which supports the original SAR. This contact may also include seeking supplementary information or documentation from the reporting operator and from other sources by means of a court order.

The investigating officer will work closely with the nominated officer, who will usually receive direct feedback on the stage reached in the investigation. There may, however, be cases when the nominated officer cannot be informed of the state of the investigation, either because of the confidential nature of the enquiry or because the case is being considered by a court.

14 Tipping off, or prejudicing an investigation

POCA therefore, in this regard, contains separate offences of tipping off and prejudicing an investigation. These offences are similar and overlapping, but there are also significant differences between them. It is important for those working in the regulated sector to be aware of the conditions for each offence. Each offence relates to situations where the information on which the disclosure was based came to the person making the disclosure in the course of a business in the regulated sector. The Terrorism Act contains similar offences¹⁸². There are a number of disclosures which are permitted and that do not give rise to these offences. More details are in the following section.

Once an internal or external report of suspicious activity has been made, it is a criminal offence for anyone to release information that is likely to prejudice an investigation that might be conducted following that disclosure. An offence is not committed if the person does not know or suspect that the disclosure is likely to prejudice an investigation, or if the disclosure is permitted under POCA or the Terrorism Act¹⁸³. Reasonable enquiries of a customer, conducted in a tactful manner, regarding the background to a transaction or activity that is inconsistent with the normal pattern of activity is prudent practice, forms an integral part of CDD measures and should not give rise to tipping off.

Where a confiscation investigation, a civil recovery investigation, a detained cash investigation or a money laundering investigation is being, or is about to be, conducted, it is a criminal offence for anyone to disclose this fact if that disclosure is likely to prejudice the investigation. It is also a criminal offence to falsify, conceal, destroy or otherwise dispose of documents which are relevant to the investigation (or to cause or permit these offences). It is, however, a defence if the person does not know or suspect that disclosure is likely to prejudice the investigation, or if the disclosure is permitted under POCA or the Terrorism Act. More details are in the following section.

An employee, officer or partner of a casino operator does not commit an offence under POCA or the Terrorism Act if the disclosure is to an employee, officer or partner of the casino operator.¹⁸⁵

The fact that a transaction is notified to the NCA before the event, and the NCA does not refuse a request for a defence (consent) within seven working days following the day after disclosure is made, or a restraint order is not obtained within the moratorium period, does not alter the position so far as 'tipping off' is concerned.

The existence of a SAR cannot be revealed to any customer of the casino at any time, whether or not a defence (consent) has been requested. However, there is nothing in POCA which prevents casino operators from making normal enquiries about customer transactions in order to help remove any concerns about the transaction and enable the operator to decide whether to proceed with the transaction. These enquiries will only constitute tipping off if the operator discloses that a SAR has been made to the NCA or a nominated officer, or that a money laundering investigation is being carried out or is being contemplated.

The combined effect of these two offences is that one or other of them can be committed before or after a disclosure has been made.

The offence of money laundering, and the duty to report under POCA, apply in relation to the proceeds of any criminal activity, wherever conducted, including abroad, that would constitute an offence if it took place in the UK. A person does not commit an offence where it is known or believed, on reasonable grounds, that the conduct occurred outside the UK; and the conduct was not criminal in the country where it took place. However, if the criminal activity would constitute an offence in the UK if committed here and would be punishable by imprisonment for a maximum term in excess of 12 months, then the defence does not apply, except if the offence is an offence under section 23 or 25 of the Financial Services and Markets Act 2000 (opens in new tab).

There is also a specific offence of failure to disclose terrorist financing which was added to the Terrorism Act through the Anti-terrorism Crime and Security Act 2001 (opens in a new tab). This offence is limited to the regulated sector, which includes casinos. The offence can be committed if a person forms knowledge or suspicion of terrorist financing or reasonable grounds for suspecting terrorist financing during the course of working for a casino, but does not make a report. Guidance issued by the Commission and approved by HM Treasury must be taken into account by any court considering whether this offence has been committed.¹⁸⁷

Interaction with customers

Normal customer enquiries will not, in the Commission’s view, amount to tipping off or prejudicing an investigation under POCA unless you know or suspect that a SAR has already been submitted and that an investigation is current or impending and make the enquiries of the customer in a way that it discloses those facts. Indeed, such customer enquiries are likely to be necessary not only in relation to money laundering but also in connection with social responsibility duties (for example, problem gambling). In regard to this offence, counter or frontline staff may not be aware that the nominated officer has submitted a SAR to the NCA. Reasonable and tactful enquiries regarding the background to a transaction or activity that is inconsistent with the customer’s normal pattern of activity is good practice, forms an integral part of CDD measures (and may be driven by social responsibility concerns) and should not give rise to tipping off or the prejudicing of an investigation.

If patterns of gambling lead to an increasing level of suspicion of money laundering, or even to actual knowledge of money laundering, casino operators should seriously consider whether they wish to allow the customer to continue using their gaming facilities. If a casino operator wishes to terminate a customer relationship, provided this is handled sensitively, there will be low risk of tipping off or prejudicing an investigation. However, if the decision has been made to terminate the relationship and there is a remaining suspicion of money laundering with funds to repatriate, consideration should be given to asking for a defence (appropriate consent).

In circumstances where a law enforcement agency requests a casino operator to continue trading with a customer as they conduct further investigations, the operator is advised to record the factors considered when agreeing or declining to do so (for example, the risks of participating in such activity, assurances provided by law enforcement, possible money laundering offences, relevant timescales provided, the gravity of the offences being investigated and the purpose of the request), and how this may change the management of risks to the licensing objectives. Given the casino operator’s heightened exposure to risk, it is advisable for the operator to ask for confirmation in writing of such requests from law enforcement. The operator should also continue to submit SARs and/or seek a defence (consent) from the NCA if they decide to continue with a business relationship with such customers.

---

¹⁸¹Section 342(6) (opens in a new tab) of POCA.
¹⁸²Sections 21D (opens in a new tab) and 39 (opens in a new tab) of the Terrorism Act.
¹⁸³Section 342(3) (opens in a new tab) of POCA and section 20 (opens in a new tab) of the Terrorism Act.
¹⁸⁴Section 333D (opens in a new tab) of POCA and section 21G (opens in a new tab) of the Terrorism Act.
¹⁸⁵ Section 333B (opens in a new tab) of POCA and section 21E (opens in a new tab) of the Terrorism Act.
¹⁸⁶Section 333D (opens in a new tab) of POCA and section 21G (opens in a new tab) of the Terrorism Act.
¹⁸⁷Sections 330 (opens in a new tab) and 331 (opens in a new tab) of POCA and Regulation 86(2).

Flowcharts

Figure 1 The risk-based approach

Note: Casino operators should undertake risk assessments of each premises and each remote site and: (a) look at the average drop/win per customer (b) risk assess each customer.

Figure 2 The risk framework and risk-based customer due diligence

Figure 3 Architecture for the risk-based process

Figure 4 Customer due diligence

Notes:

1. Operator to be reasonably satisfied that the customer is who they claim to be.
2. The requirement applies to an operator, not to each premises.
3. Identification: Name, plus residential address or date of birth.
4. Verification: Documents or electronically.
5. Records of CDD to be kept for five years from the end of the business relationship or last visit to the premises run by the operator.

Figure 5 Determining when the threshold is reached (non-remote casinos) – tokens and gaming machines

Notes:

1. A customer could spend €1800 on tokens and a further €1800 in a gaming machine and not reach the threshold.
2. Risk-based approach – operator analysis of spending behaviours at each premises and an objective assessment made of the likelihood of customers reaching either threshold. Measures then put in place need to capture all customers likely to hit either threshold.

Figure 6 Determining when the threshold is reached (non-remote casinos) – casino account

Note: Risk-based approach – operator analysis of spending behaviours at each premises and an objective assessment made of the likelihood of customers reaching the threshold. Measures then put in place need to capture all customers likely to hit the threshold.

Figure 7 Determining when the threshold is reached (non-remote casinos) – casino account

Note: Risk-based approach – operator analysis of spending behaviours and an objective assessment made of the likelihood of customers reaching the threshold. Measures then put in place need to capture all customers likely to hit the threshold.

Figure 8 Record keeping

Note: Operators should devise and implement a clear and articulated policy and procedure for ensuring all relevant employees are aware of their legal obligations in respect of the prevention of money laundering and terrorist financing.

Figure 9 Reasonable grounds to suspect (objective test)

Figure 10 Knowledge or suspicion of money laundering or terrorist financing (subjective test)

Figure 11 Defence under POCA or Terrorism Act

Figure 12 Defence under POCA or Terrorism Act

In the case of operators where the remote gambling equipment used in a transaction which is known or suspected to involve money laundering is located in Gibraltar and involves a British customer, known or suspected money laundering activity must be reported to the Gibraltar FIU and the UKFIU.

Glossary of terms

AML

Anti-money laundering

Beneficial ownership

Beneficial ownership is enjoyed by anyone who has the benefits of ownership of property, but does not apparently own the asset itself. The term is defined in the Regulations.

Business relationship

A business, professional or commercial relationship between an operator and a customer, which is expected to have an element of duration

Business-to-business

A term used to describe commerce transactions between businesses, or the exchange of products, services or information between businesses. In other words, it is business which is conducted between firms, rather than between firms and consumers (or customers)

Casino operators

Firms holding a casino operating licence issued by the Commission.

Criminal spend

In the context of gambling, the use of the proceeds of crime to fund gambling as a leisure activity (otherwise known as lifestyle spend)

CTF

Countering terrorist financing.

Customer tracking

The process of capturing drop and win data for a customer.

Drop/win figures

Data recorded by casinos that covers the total value of chips purchased as well as the total loss or win for a customer over a 24- hour period.

Money laundering

The process by which criminal or 'dirty' money is legitimised or made 'clean', including any action taken to conceal, arrange, use or possess the proceeds of any criminal conduct. Defined in section 340 of POCA

Non-remote casinos

Casinos licensed to operate commercial casino premises.

Operators

Firms holding an operating licence issued by the Commission

PFL

Personal functional licence.

POCA

The Proceeds of Crime Act 2002, which is intended to reduce money laundering and the profitability of organised crime through the use of tools such as asset recovery

PML

Personal management licence.

Proceeds of crime

Property from which a person benefits directly or indirectly, by being party to criminal activity, for example stolen money, money from drug dealing or property stolen in a burglary or robbery

Proliferation financing

The act of providing funds or financial services for use (in whole or in part) in the manufacture, acquisition, development, export, trans-shipment, brokering, transport, transfer, stockpiling of, or otherwise in connection with the possession or use of chemical, biological, radiological or nuclear weapons, including the provision of funds or financial services in connection with the means of delivery of such weapons and other Chemical, Biological, Radiological and Nuclear (CBRN)-related goods and technology¹⁸⁸, in contravention of a relevant financial sanctions obligation.¹⁸⁹

Remote casinos

Casinos licensed to offer casino games by means of remote communication.

SAR

A suspicious activity report – the means by which suspicious activity relating to possible money laundering or the financing of terrorism is reported to the NCA under POCA or the Terrorism Act

Source of funds

Where the funds, money or cash to finance the transaction come from

Source of wealth

The origin of a person’s overall body of wealth (that is, their total assets), which should give an indication of the volume of wealth the person actually has, and how they acquired it.

Supervisory authorities

Supervisory authorities, which are listed in regulation 7 of the Regulations. The Commission is the supervisory authority for casinos.

The Act

The Gambling Act 2000

The Commission

The Gambling Commission

The NCA

The National Crime Agency, which became operational in October 2013, is a crime-fighting agency with national and international reach that works in partnership with other law enforcement organisations to cut serious and organised crime. The NCA is the organisation to which suspicious activity is reported

The Regulations

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

The Terrorism Act

The Terrorism Act 2000

Third country

A country which is outside the United Kingdom

UKFIU

The United Kingdom Financial Intelligence Unit, which is the unit within the NCA that operates the disclosure regime for money laundering.

---

¹⁸⁸ The meaning of 'biological weapon', 'chemical weapon', 'CBRN-related goods and technology', 'nuclear weapon' and 'radiological weapon' are set out in regulation 16A(10).
¹⁸⁹ A relevant financial sanctions obligation is a prohibition or requirement in regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018 (opens in new tab) and imposed for one or more of the purposes in section 3(1) and (2) of the Act so far as it relates to compliance with a relevant United Nations (UN) obligation.