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Gaming & Gambling
The global AML landscape is diverse and the gaming and gambling industries must keep pace with developing rules and regulations in order to meet their compliance obligations.
Why Sports and Racing Betting Need AML/CTF?
Sports and Racing Betting Operators are required to engage in activities of placing a bet on the result of a race/competition by placing money. Subsequently, if the following activities are engaged in, anti-money laundering and/or counter terrorism financing (AML/CTF) measures should be implemented:
Placing bets via a bookmaker or sportsbook in behalf on a client;
Cash transactions valued above a certain threshold are carried out;
Cash transactions valued above a certain threshold are carried out;
Money is stored in provided accounts such as mobile wallets for betting purposes
Often, depending on jurisdiction, if a person’s gross annual revenue is valued more than a specified amount, said person may be regarded as a ‘financial institution’. For example, businesses earning over US $1 million are considered a ‘regulated entity’ by the Bank Secrecy Act (USA), whereas in Australia, for payouts worth over AU $10,000 require an Identity Verification (IDV) by Austrac.
Risk exposure
All sports betting and racing activities are considered cash intensive and require large monetary transactions. Often, through layering, complicated transactions are hidden within unlawful sources of cash. The rate at which cash is run through gambling operations, enables for money to be laundered quiet easily. Practices such as combining funds of money, exchange money, or even keep money in separate betting accounts prior to cashing it out for bets all expose the risks of ML/TF.
Compliance Measures
Every betting and gambling enterprises must register with their relevant regulatory authority. They must also exhibit a compelling culture of compliance which can be achieved by reporting either transactions or physical cash receipts that are valued above a certain threshold. Additionally, in-depth customer vetting is also needed. This includes client due diligence, monitoring, record keeping and reporting, as well as both KYC and IDV.
Gaps in Compliance
By utilising betting platforms in order to both store and transfer illicit cash, influence transactions and hide any other illegal activities enables clients to avoid any regulatory laws and hide any illegal profits. Due to their role of acting as agents for clients, betting companies are resultantly exposed to ML/TF laws. The main gaps in compliance in the sports and racing betting industry are due to conflicts of interest, a lack of legalisation and regulations for "live betting," and the fear of losing business in the race to draw in a larger pool of bettors.
Establish Compliance
It is expected for betting and racing businesses to establish risk-based compliance program framework. They are further expected to:
- Analyse the risk posed by a company's services and delivery methods, clients, the country in which it conducts business or operates, the volume or pattern of its transactions, and business relations.
- Design and implement controls and risk reduction procedures in order to reduce risks.
- Establish an AML/CTF program. It should include the client's name, any sanctions, beneficial ownership information, and PEP screening.
- Have strategies and procedures in place for ongoing monitoring, as needed by a regulator.
- Create a risk-based strategy for ongoing analysis of commercial interactions, trends, and transactions.
Maintain your Compliance Program
As per the regulations of your regulatory body, it is necessary to establish and maintain your compliance program. Penalties for non-compliance may be monetary or criminal in nature.
Constant compliance entails:
Constant compliance entails:
- Selecting a compliance officer, conducting background checks on potential employees, educating staff members on the hazards involved, and keeping them informed of AML/CTF regulations.
- Carrying out enhanced due diligence (EDD) when signing up for cash-out/cash-in bets, a credit extension, significant cash transactions, or complicated transactions.
- Constant transaction monitoring for irregularities, overseas transactions, deals with prohibited parties, or when sizable transactions are accompanied by little betting activity.
- Collecting client information from all touchpoints and keeping records.
- Submitting compliance reports, suspicious transaction reports (STRs), and other duties as specified by a relevant regulator.
- Periodically reviewing your risk assessments and compliance programme with outside audits.
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