The sanctions have been backed by the EU's Council of Ministers as part of a new Anti-Money Laundering (AML) Directive it has adopted. The proposals still need to be backed by MEPs and would also need to be implemented into national law before they become effective.
The sanctions regime adopted by the Council would, if finalised, force individual EU countries to set maximum penalties of at least €5 million or 10% of annual turnover for "serious, repeated and/or systematic" breaches of the rules by credit or financial institutions.
The proposals adopted by the Council could, if introduced, make gambling operators subject to new anti-money laundering rules. Gambling operators could be required to conduct customer due diligence checks in line with the EU regime when their customers, in a single transaction, wager stakes and/or collection winnings worth at least €2,000.
However, EU countries would be able to exempt gambling operators, although not casinos, from those requirements if, after conducting a risk assessment, they have found there is a "proven low risk" of money laundering and terrorist financing because of "the nature and, where appropriate, the scale of operations of such services".
The Council's proposals make it clear that the exemption of gambling service providers from the customer due diligence rules should only be considered in "strictly limited and justified circumstances".
Gambling regulation and licensing experts at Pinsent Masons, the law firm behind Out-Law.com, said the new AML rules could impact on gambling providers operating in the EU.
"French licensed gambling operators have been subject to the same AML and reporting obligations as financial institutions since the French Online Gambling Act was enacted," Diane Mullenex said. "Their obligations include, among other things, having an AML policy, which is reviewed by ARJEL – the French online gambling commission, and reporting fraudulent transactions to the French authorities. French licensed gambling operators will hence have to comply with any increased obligations that may result from the enactment and implementation of the new AML Directive."
Audrey Ferrie said that the Gambling Commission in Great Britain already “takes the issue of money-laundering very seriously”.
“One of the objectives of the Gambling Act 2005 is to prevent gambling from being a source of crime or disorder or being used to support crime,” Ferrie said. “To that end the Commission has produced guidance notes for operators on money-laundering issues and has promulgated conditions which deal specifically with the current AML Directive. It is the Commission’s intention to update the Licence Conditions and Codes of Practice in line with the new AML Directive and they have already begun work to this effect.”
“Based on my experience of working with the Commission on a number of cases, I would be very surprised if they would support an exemption for gambling operators such as bookmakers. The ‘proven low risk’ threshold is quite high,” she said.
The proposed new AML Directive would establish a new company ownership register framework by forcing businesses subject to the new rules to provide information about the ultimate beneficial ownership of their company to new central registers to be operated by EU countries.
The data on the registers would be open to regulators to access as well as to other "competent authorities" without restriction, and banks and other "obliged entities" would also be able to access the information when conducting 'know your customer' (KYC) checks.
In addition, individuals that could demonstrate a "legitimate interest" in the data, such as journalists, could also gain access to the information.
Financial services litigation and compliance expert Michael Ruck of Pinsent Masons said a greater number of firms and traders will find themselves subject to the new anti-money laundering regime if the Council proposals are introduced.
This is because those plans would see a lower financial threshold for cash payments set for when the rules would apply, he said, as well as the inclusion of those providing gambling services within the scope of the new framework.
"The new rules approved by the Council seek to include protections against money laundering and terrorist financing in a fast developing world where technology is constantly changing the risks and the way monies are held or transferred," Ruck said. "The €10,000 limit will now bring many firms within the regulations who previously may never have even considered the potential for them to be part of the regulated sector for the purposes of money laundering and subject to the various requirements this in turn imposes."
"Many firms will need to register for the purposes of the money laundering regime, undertake due diligence, appoint a money laundering reporting officer, introduce training and put record keeping policies in place," he said.
Ruck said that firms subject to the new anti-money rules with face additional cost and regulatory burdens.
"Only time will tell if, in the interests of transparency, UK regulators responsible for the supervision of the new regime when it comes into effect disclose the impact of the new requirements. Those might include the additional number of investigations, recovery actions, preventative steps that the new rules have enabled the regulators to undertake," Ruck said.