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Volume: 16 Issue: 3
(March 2017)

Keywords:
draft uk money laundering regulations 2017 exempt gambling operators 4mld requirements except casinos uk governments hm treasury published 15

Jurisdictions:
UK EU

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Draft UK Money Laundering Regulations 2017 exempt all gambling operators from 4MLD requirements except casinos

The UK Government’s HM Treasury published on 15 March 2017 a draft of the Money Laundering Regulations 2017 (‘MLRs’), which seeks to transpose the requirements of the EU 4th Anti-Money Laundering Directive (‘4MLD’) into UK law, alongside a consultation on the matter; of particular note for gambling operators is Treasury’s decision to exempt all gambling service providers from the 4MLD’s requirements, except for remote and non-remote casinos.

Potentially the entire UK industry could be brought into the scope of the 4MLD, but Treasury has utilised an exemption under the 4MLD which allows ‘in full or in part, providers of certain gambling services’ to be exempted provided they are of a ‘proven low risk.’ Treasury, in the consultation on the MLRs, notes the AML risks reported by respondents to its initial consultation on transposing the 4MLD, and also those highlighted by the Gambling Commission in its industry-specific risk assessment and by the Government itself in its national risk assessment of money laundering and terrorist financing, published in 2015 (the ‘NRA’); the NRA for example noted how the range of products and services provided in the gambling sector can make it an attractive target for criminals.

“The Commission’s risk assessment described both the remote and non-remote betting sectors and the remote bingo sectors, alongside the casino sector, as ‘having a higher risk relative to other gambling sectors’ and cited numerous concerns to back up that description. I find it surprising therefore that the betting sector in particular has been exempted on the basis of ‘proven low risk,’ although Treasury has sought to explain this by reference to [a number of] mitigating factors,” said David Clifton, Director at Clifton Davies Consultancy Ltd. “I suspect that lobbying by the horseracing sector has been particularly effective in finding sympathy for its cause in Parliamentary circles.”

Such mitigating factors include existing requirements under the Licence Conditions and Codes of Practice to prevent crime associated with gambling, and the overall legislative framework in Britain.

“While the gambling industry can count itself as somewhat lucky for present purposes, the position will be reviewed on an annual basis and so there is no room for complacency,” said Nicola Bridge, Partner at Mishcon de Reya LLP. “It was made clear that there is a need to further raise standards and the Government has emphasised that if in any subsequent assessment any sector is assessed as being higher risk, the exemptions could be removed.”

The consultation on the MLRs closes on 12 April 2017, with the Government’s final policy decisions to be implemented through legislation required to enter into force by 26 June 2017.

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