EurActiv.com

EU news and policy debates across languages

08/12/2016

Commission brokers agreement on online gambling, investigates money laundering risks

Digital

Commission brokers agreement on online gambling, investigates money laundering risks

The European Commission brokered the first ever MoU between national gambling regulators on 27 November.

[Flickr/Jim Makos]

European Commission officials are hailing a new MoU between national regulators of online gambling as “historic”.

The Commission has taken a soft power approach to gambling, an area that rakes in tax revenue for EU member states, which are touchy about EU-wide legislation. Now, the Commission is adjusting to its role as broker of new deals between national authorities with the new anti-money laundering directive set to go into effect in June 2017.

On Friday (27 November), the executive hosted a group of national gambling regulators to sign off on a set of voluntary guidelines that aim to safeguard consumer protection and establish legal standards across EU member states, Norway, Liechtenstein and Iceland. The Commission drafted the guidelines but only national authorities signed.

Officials called the document groundbreaking because it sets up a system for regulators in different countries to share information about companies that operate online gambling websites.

That will tighten oversight of companies that operate in more than one EU country and are already on regulators’ radar for suspicious behaviour, Commission officials argued.

Countries that signed the MoU agreed to communicate about infractions including match fixing, money laundering and the falsification of signatures.

European Commission officials heralded the agreement as a watershed given the tough resistance the EU has come up against on gambling regulation. One official said the Commission’s role as broker between national authorities was critical because of icy relations between regulators in member states who are often at odds over their sharply different approaches to online gambling.

>>Read: Germany second only to Luxembourg in money laundering risk, says report

On the same day regulators signed off on those standards, Commission officials also met with national authorities about the anti-money laundering directive that was approved in May.

Member states can ask to exempt gambling businesses from the new rules, which include required reporting of suspicious behaviour and transaction records, pending the Commission’s approval. National regulators will have to justify requests with evidence that specific gambling services—online or offline—don’t pose a significant threat of covering up money laundering.

The executive will publish its own assessment detailing how likely various services are to aid money laundering when the directive is implemented in 2017.

One European Commission source told EurActiv that the executive is wary of handing out exemptions to gambling services. “We believe there is not one single game of chance where the risk of money laundering doesn’t exist,” the source said.

According to the directive, member states that request an exemption will need to size up the risk of gambling services with an eye towards “vulnerability of the applicable transactions, including with respect to the payment methods.”

Regulators are coming under pressure to crack down on money laundering following the terrorist attacks last month in Paris.

At a meeting in Brussels on 20 November, justice and home affairs ministers from EU member states called for legislators to cut off financing to terrorist networks by targeting virtual currencies and money laundering schemes.

A Commission source disclosed that for now, the executive does not have evidence that online gambling is a common smokescreen for terrorist organisations’ money laundering. But the source added that Commission officials would investigate with financial intelligence and law enforcement agencies before publishing its assessment of risk factors involved in online gambling.

Background

The European Commission brokered a memorandum of understanding between national gambling regulators on 27 November 2015. The new understanding is supposed to increase communication between national gambling regulators who are trying to clamp down on illegal gambling practices. In June 2015, the European Court of Justice ruled that a Hungarian ban on slot machines was an infringement on the right to provide services.

The new anti-money laundering directive was approved in May 2015 and will be implemented in June 2017. At that time, the Commission will publish its own assessment outlining risks for money laundering in the EU. Member states can request exemptions from the directive for gambling services if they can justify low risk for money laundering.

Timeline

  • 27 November 2015: memorandum of understanding signed by national regulators on online gambling
  • June 2017: anti-money laundering directive implemented

Further Reading