Bookmakers already celebrating a successful start to Cheltenham week will have further cause for celebration with the news that the betting industry will continue to be exempt from European money laundering rules.
There was a real danger that the Fourth EU Money Laundering Directive would encompass bookmakers given the classification of gambling as a high risk area for money laundering. At last year’s Betting on Sports conference, one compliance manager described it as introducing the biggest change the retail betting sector will have ever experienced.
However it seems that the Gambling Commission’s recent work on money laundering and the tightening up of its Licence Conditions and Codes of Practice (LCCP) has persuaded the Treasury that areas of the gambling industry are suitably policed in this area already and that its latest National Risk Assessment (NRA) views bookmaking as low-risk and as such exempt from the 4MLD.
Licensing expert David Clifton of Clifton Davies commented: “In what is a surprising decision to many – me included – the Government has made a policy decision to exempt all gambling service providers other than remote and non-remote casino operators from the requirements of 4MLD.
“In light of comments contained in the September 2015 first National AML Risk Assessment and repeated concerns expressed by the Gambling Commission, betting operators have good reason to be mightily relieved that they will continue to fall outside the ambit of the Money Laundering Regulations, but they will need to remember that they remain bound by both the Proceeds of Crime Act 2002 (breach of which could constitute a criminal offence) and the Gambling Act 2005 licensing objective to prevent gambling from being a source of crime or disorder.”
Things can still change in the future though. In its consultation document on money laundering and terrorist financing (ML/TF), the Treasury warned: “The government will regularly review its position on the ML/TF risk that gambling providers present. Moreover, the Gambling Commission will continue to evaluate ML/TF risk across all gambling sectors, and this information will contribute to and influence future NRAs.
“Importantly, the government recognises that the risk levels attributed to a particular gambling sector are not static and will vary over time. As a result, if a gambling sector can no longer be deemed low risk (including where the sector fails to adequately manage the ML/TF risks) then the exemption could not be maintained. It is therefore imperative that gambling providers comply with the requirements of the Gambling Act and the strengthened LCCP to ensure that they have effective policies, procedures and controls in place to mitigate ML/TF risks, and continue to raise standards.”