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How should UK operators be thinking about their AML/CTF controls following the publication of the UKGC’s 2023 risk assessment?

Last week, the Gambling Commission published its 2023 risk assessment for money laundering and terrorist financing in the gambling industry.

The guidance built upon the last risk assessment published by the UKGC in 2020, with the identified threats largely falling upon the same lines.

For example, land-based and online casinos remained at high levels of risk, the assessment noted, while the national lottery was considered low risk.

The most significant change was that the UKGC raised the overall terrorist financing risk from low to medium, largely as a result of the regulator reassessing the potential impact of failure.

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

This requires regulators in each sector that might feature money laundering to create regular risk assessments to judge the threat landscape.

The regulator said the purpose of these is to help operators draw up their own protections, inform the UKGC’s regulatory work and contribute to the creation of national risk assessments.  

NEXT.io sat down with Richard McCall, CEO of data intelligence and source of funds specialist Armalytix, to ask how the UK industry should be thinking about the assessment, and ML/TF risk in general, in 2024.  

1. Money laundering risk remains low across industry

In keeping with the government’s 2020 national assessment, the UKGC deemed the risk of money laundering in the gambling sector to be low.

This is when compared to other sectors featuring ML/TF risk, such as financial services, money transfer businesses and high value art dealerships.

“The amount of money that you can place in a single bet without questions starting to be asked isn’t really high enough for people to be able to launder money in great quantities,” said McCall.

“Whereas it may be relatively easier to launder large sums of money through complex financial transactions.”

2. Casinos are the heart of money laundering regs

At present only casinos are covered under the wider government’s money laundering remit. This means the rest of the industry’s ML framework is covered only under the Gambling Commission’s own guidelines, as opposed to statute.

“The purpose of the risk assessment is for the Commission to report back to the Treasury saying that, ‘we’ve done this risk assessment and here’s how we’ve assessed it and actually, there isn’t too much to worry about in gaming,’” said McCall.

According to the Armalytix chief, the government might opt to suck more areas of the gambling sector into the overall regulations if it considered the Commission to be not conducting its role effectively.

3. Operators can use affordability checks for AML compliance

The new assessment coincides with the Commission’s consulting on the imposition of affordability checks for players who hit certain spending thresholds.

The government’s attempt to rebrand these to financial risk checks implied the checks would also play a role in preventing AML violations.

McCall highlighted that businesses should be attempting to take advantage of the imposition of these checks, to shore up their money laundering processes.

“Ultimately, by reusing the technology and processes designed to enhance AML and CTF controls to also address player protection, we believe you can create a more seamless process and catch problems earlier,” he said.

4. Money laundering is a global issue

McCall highlighted that it is the UK’s role as a global financial hub that lies behind its relatively comprehensive AML regulations.

“I don’t think any country is going to be able to actively ignore this unless they’re the sort of country that turns a blind eye to these types of activity,” he said. 

“The UK has always been one of the financial capitals of the world. And as such, to maintain that reputation, the government has required companies to do more stringent checks than some other countries.”

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