UK Gambling Commission publishes final guidance document

Following extensive consultation since October 2007, the UK Gambling Commission has compiled and published its regulatory document: "The Prevention of Money Laundering and Combating the Financing of Terrorism." The publication gives guidance for remote and non-remote casinos concerning their responsibilities under the Money Laundering Regulations, which came into effect on 15 December 2007, and the Proceeds of Crime Act.

The purpose of the guidance is to set out how casino operators can and must comply with UK money laundering regulations and the Proceeds of Crime Act.

In summary, the principles to be followed involve casinos, whether offline or online, having appropriate systems and processes to forestall and prevent money laundering and terrorist financing.

To achieve this these operations should:

Develop systems and controls that are appropriate for their businesses;

Adopt a risk-based approach that is flexible, effective, proportionate and cost effective;

Have full commitment from, and responsibility resting with, senior management;

Regularly assess the adequacy of their systems and controls;

Maintain, where necessary, records of customers and transactions that meet the needs of law enforcement investigations tackling money laundering and terrorist financing;

Provide initial and ongoing training for all staff;

Support their nominated officers with resources and authority to operate objectively and independently;

Engage with law enforcement bodies and the Gambling Commission by reporting suspicious activity; and

Participate in feedback and best practice forums.

All casino operators must have a nominated officer holding a personal management license issued by the Commission, and must establish and maintain appropriate polices and procedures relating to:

Customer due diligence measures and ongoing monitoring;

Reporting, record-keeping, internal control, risk assessment and management; and

The monitoring and management of compliance, and the internal communication of policies and procedures, together with staff training.

Operator policies and procedures must cover:

The arrangements for nominated officer reports to senior management;

The systems for customer identification and verification, including enhanced arrangements for politically exposed persons;

The circumstances in which additional information in respect of customers will be sought in the light of their activity;

The procedures for handling suspicious activity reports, covering both staff reporting and transmission to the Serious Organised Crime Agency (SOCA);

The mechanisms for contact between the nominated officer and law enforcement or SOCA, including the circumstances in which appropriate consent should be sought;

The arrangements for recording information not acted upon by the nominated officer, with reasoning why no further action was taken;

The monitoring and management of compliance and the internal communication of policies and procedures, including details of how compliance is monitored by the nominated officer;

Supporting records in respect of business relationships;

The arrangements for communicating the policies and procedures to all relevant staff; and

Staff training records.

Operators must ensure that their staff understand the regulations and implement casino policy and procedures in the context of their client base including the requirements for customer due diligence (CDD), record keeping, and suspicious activity reports.

Casino operators must ensure staff are trained and kept up to date with requirements including a minimum of ensuring all relevant employees are:

Made aware of the law relating to money laundering and terrorist financing; and regularly given training in how to recognise and deal with transactions and other activities which may be related to money laundering or terrorist financing.

Staff should also understand:

The casino’s attitude to the risk-based approach;
How the casino will track customers when customer due diligence is not undertaken on entry to the casino;
How the casino will undertake customer due diligence;
How politically exposed persons (PEPs) will be identified; and
The role of the nominated officer and what to do in his absence.

Staff must report to the nominated officer any knowledge or suspicion of money laundering whether by players, guests or staff.

The law concerning money laundering is based on the general and wide ranging prevention and detection of the use of any proceeds of crime, the prevention and detection of terrorist financing, and for some businesses (including casinos) the more specific requirements of the business and its employees to have policies and procedures in place covering the risks it faces from money laundering.

Money laundering is defined in section 340 of the Proceeds of Crime Act (2002) and covers wide ranging circumstances involving any activity that may involve the proceeds of any crime. This includes:

Trying to turn money raised through criminal activity into ‘clean’ money (that is, classic money laundering);

Handling the benefit of acquisitive crimes such as theft, fraud and tax evasion;

Handling stolen goods;

Being directly involved with any criminal or terrorist property, or entering into arrangements to facilitate the laundering of criminal or terrorist property; and

Criminals investing the proceeds of their crimes in a range of financial products.

Using money in casinos, regardless of the amount, that is the proceeds of any crime can amount to money laundering if the person using or taking the money knows or suspects that it is the proceeds of crime. Money laundering offences can be committed by both the customer and the casino staff depending on respective levels of knowledge or suspicion.

The Money Laundering Regulations (2007) came into effect on 15 December 2007 and replace the Money Laundering Regulations (2003). The Regulations are generated from the Third European Directive (2005) that was adopted in October 2005. This directive represents Europe’s ongoing commitment to tackle the international problem of money laundering and terrorist financing by implementing the global standards produced by the Financial Action Task Force in 2003.

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