The Financial Action Task Force (FATF) has updated its recommendations on how EU Member States should conduct risk assessments against money laundering (AML) and terrorist financing threats.
The new industry guidance is set out in the European Commission (EC) Supranational Risk Assessment Report, which was last updated in 2019. In accordance with the EU Anti-Money Laundering Directive (AMLD), the SNRA report must be updated every two years. However, due to the COVID-19 pandemic, the report was delayed until 2022.
Importantly, the report cites online gambling along with crypto assets as two sectors in need of a risk recalculation. The FATF is also aware of the ongoing conflict affecting European business as member states rebuild amid Russia’s intensifying war of aggression against Ukraine.
The above situation exacerbates the risk of money laundering in various sectors of economic and commercial activity in the EU. The study of AML and CFT threats included 43 products/services grouped into 8 business categories, including gambling.
Casinos are at high risk of threats related to cash transactions despite improvements in the regulatory framework. The report highlights the banknote paradox where demand for euro banknotes has risen in two years and retail cash transactions in Europe have declined significantly.
Despite the changing face of crime, the criminal economy is still largely based on cash, and the anonymity and relative ease of movement associated with cash and cash-like assets make the EU critically prone to ML/TF risk.
In the case of online gambling, the threat is primarily related to the vulnerability of Member States, in which unlicensed online gambling operators can appear.
The gambling industry is noted as a sector with a particular deficit in reporting suspicious transactions. The European FIU is recommended to improve the quality of industry reporting and the use of the information provided.
Anti money laundering measures for gambling will be further strengthened by Member States providing appropriate training aimed at proper risk assessment of relevant products/business models for compliance officers and retailers.
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