KYC360 Weekly Roundup

Published on May 12, 2023

Gaming & Gambling Facing Perfect Storm

Welcome to this week’s AML Roundup. The gaming & gambling sector is facing one of its biggest ever challenges as pressure mounts to improve its anti-money laundering capabilities and the safeguarding of players. Numerous scandals have shown that operators are highly vulnerable to criminal exploitation and have a very poor track record when it comes to the duty of care it owes to its players. As a result, regulators and governments across the world have ramped up their scrutiny, leading directly to an escalation in punitive action.

Our coverage of legislation, reports, analyses, and opinions includes, appeals for the EU to uphold corporate transparency in the 6th anti-money laundering directive; fears that the UK democratic process is dangerously exposed to foreign money; and even calls for the newly coronated King Charles III to push for breakup of UK’s ‘network of satellite tax havens.’

To complete this week’s Roundup, we provide you with updates on global sanctions, the latest news from the crypto and virtual assets sector, and deliver reports covering money laundering, fraud, corruption, and bribery from around the world.

 

Gambling_GamingGaming and Gambling

What is covered in the UK Gambling Act white paper?

After years of delays and speculation, the most transformative review of gambling in the UK for nearly two decades was finally published. The Gambling Act review white paper signifies a landmark upheaval of how gambling will be regulated in the UK in an age of smartphones and 24/7 internet access. While the white paper contained much of what the industry expected, it also contained a few unexpected additions.

Gambling white paper consultations criticised by members of the House of Lords

While the Lords broadly welcomed the provisions of the white paper, some felt that the document did not go far enough in some areas, such as the decision to not further clamp down on advertising and the number of measures put out to consultation. 

“How long will it take to have more consultations? This reminds me of the great saying in the film industry, ‘hurry up and wait’, when you get to the location and everybody is standing around, ready, but nothing happens.” 
Lord Grade of Yarmouth

“Gambling addicts will die because of delay to reforms”

The UK government has been warned that more gambling addicts will die because of delays to reforms. While affordability checks and slot machine stake limits were welcomed, experts called the proposals a “missed opportunity”. 

US gaming regulators urge DOJ to prioritise combating illegal operators

A coalition of seven US gaming regulators have sent a letter to the US Department of Justice (DOJ) urging them to prioritise combating illegal offshore operators. The Attorney General was asked to address offshore illegal gambling and the threat it poses, in the hope that the DOJ can address the issue through leadership in enforcement action. 

The Malta Gaming Authority prioritises cross-regulator collaboration to combat AML 

The MGA is aiming to enhance cross-regulator collaboration in the fight against anti-money laundering following a series of collaborative workshops. The regulator’s AML division recently joined forces with the Financial Intelligence Analysis Unit’s supervision unit, organising a joint workshop to further streamline the supervisory process in compliance examinations. 

Crown Casino fined $30m by gambling watchdog for illegally cashing customers’ cheques 

Crown Casino has been hit with a $30 million fine by the Victorian Gambling and Casino Control Commission (VGCCC) over the cashing undocumented bank cheques. The gambling watchdog found the gaming giant allowed patrons to gamble at the Melbourne casino by depositing bank cheques made out to themselves and not the company. 

Betfair fined SEK 4m for allowing betting on Under-21 football matches 

Sweden’s Spelinspektionen has issued a SEK 4m fine (£310,000) and a warning to Betfair International for offering betting on Under 21 Swedish football, which is prohibited. The Swedish regulator had previously handed Betfair a warning and an SEK 4.5m (£350,000) penalty in 2019 for permitting betting on participants under 18.

Netherlands gambling authority fines Merkur Casino Almere for giving access to self-excluding gambler 

The Netherlands gambling authority, de Kansspelautoriteit (KSA), has fined Merkur Casino Almere €45,000 for allowing a self-excluding gambler access to the casino. According to the KSA,  the individual had previously registered on the Central Register of Exclusion of Games of Chance (Cruks) but was allowed to access the casino nine times between February 17th, 2022 and March 2nd, 2022.

 

Financial_ServicesMoney Laundering, Fraud & Corruption

Dutch officials warn bribing officials has become a business model in criminal world 

Bribing civil servants for information to sell to criminal organisations is an increasingly common phenomenon in the Netherlands, according to Arthur van Baaren, general director of the Rijksrecherche, the organization that handles internal investigations at government services, “corrupting civil servants has become a business model.”

Video: Did Qatar buy its way into the European parliament? 

In this video presented as part thriller, part farce, starring a glamorous Greek MEP, an Italian toyboy and bundles of euros stuffed in suitcases and hidden under beds, asks the question: Did Qatar buy its way into the European parliament?

US congressman charged with fraud and money laundering 

Republican congressman George Santos has been charged with fraud, money laundering, and theft of public funds, in a 13-count federal indictment. He faces seven counts of wire fraud, three counts of money laundering, one count of theft of public funds, and two counts of making materially false statements to the House of Representatives. If convicted of the charges he could face up to 20 years in prison.

SEC issues largest-ever whistleblower award 

The Securities and Exchange Commission (SEC) has announced its largest-ever award, almost $279 million, to a whistleblower whose information and assistance led to the successful enforcement of SEC and related actions. This is the highest award in the SEC’s whistleblower program’s history, more than doubling the $114 million whistleblower award the SEC issued in October 2020. 

“The size of today’s award – the highest in our program’s history – not only incentivizes whistleblowers to come forward with accurate information about potential securities law violations, but also reflects the tremendous success of our whistleblower program.”
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement

Hong Kong police arrest 14 over suspected laundering of HK$560 million 

Hong Kong police have arrested 14 individuals in a crackdown on a local criminal syndicate behind the alleged laundering of over HK$560 million (US$71.3 million) in crime proceeds. According to the force’s financial intelligence and investigation bureau, the syndicate laundered the illegal funds through 46 bank accounts and two key opinion leader management companies that the gang had set up.

UK NCA dismantles money laundering and people smuggling network

Sixteen people have been convicted following a major National Crime Agency investigation into an organised crime group involved in international money laundering and people smuggling. Members of the network smuggled over £42 million in cash out of the UK, making hundreds of trips to Dubai between 2017-2019. NCA officers also uncovered a plot to smuggle 17 migrants, including five children and a pregnant woman, into the UK in the back of a van carrying tyres in 2019. 

 

RequirementsLegislation, Regulation and Sustainability

Opinion: EU commission must uphold corporate transparency in the 6th anti-money laundering directive

Representatives of civil society, media and academia from around the world have penned an open letter to Mairead McGuinness, European Commissioner for Financial Services, Financial Stability and Capital Markets Union. On the eve of interinstitutional negotiations on the EU’s anti-money laundering legislative package, it presents an urgent appeal to explicitly support strong provisions for meaningful stakeholder access to beneficial ownership registers that were recently proposed by the European Parliament.

EU Council adopts rules to facilitate transnational information exchange in criminal cases

The Council of the European Union has adopted new rules that requires states to make information concerning serious criminal offences available to other member states’ law enforcement authorities, in order to facilitate cooperation in their response to transnational criminal activities.

Government rejection of Lords’ amendment leaves UK democratic process dangerously exposed to foreign money 

There is widespread belief among independent bodies and experts that UK political finance is vulnerable to foreign interference and that the current system is not able to prevent it. So, for many it was deeply disappointing that the government voted down the amendment to the National Security Bill introduced in the Lords. 

King Charles III urged to push for breakup of UK’s ‘network of satellite tax havens’

Tax Justice Network, a coalition of researchers and activists campaigning against tax avoidance, have sent a letter to King Charles, urging him to use his reign as monarch to call for a revamp of laws that allow an estimated £152bn worth of tax avoidance in the UK, the crown dependencies, and the British Overseas Territories.

Report: Customer requirements for a secure virtual signing experience

In a world where we are making more financial decisions on digital platforms, there must be a process in place where meetings can be tracked, and signatures can be ensured virtually. This impact study explores how financial services providers can balance security, compliance, and remote interactivity with the need for a more human centric digital experience.

German customs to play key role in curbing crime such as money laundering

German customs will be strengthened in order to play a key role in the fight against organised crime and money laundering, helping to track down illegally obtained assets and uncovering money laundering, and illegally obtained assets will be confiscated. 

“Customs will become even more powerful, specialized and efficient with the new strategy. The objective is to identify technical developments on the perpetrator side at an early stage and to be able to counter this successfully.”
German Finance Minister Christian Lindner

Report: Cross border compliance an increasingly complex issue faced by multinational companies 

Companies operating cross border businesses face a fragmented compliance framework comprised of many different local laws spanning a wide range of issues. The consequences of getting it wrong can be grave, as corruption acts are penalised and serious economic and reputational consequences are incurred. This report explores some of the biggest compliance pitfalls facing foreign companies engaging in international trade in France and Germany and what companies can do to avoid them.

Enhanced protections on the horizon for UK whistleblowers 

The Government’s proposed new laws aimed at expanding the scope of statutory protections for whistleblowers in the UK continue to make their way through Parliament. The Protection for Whistleblowing Bill, first introduced in June 2022 contains a number of provisions which seek to widen the application of the regime and the Government’s powers of enforcement.

The Future of Risk Management and Compliance 2023: Regulatory trends  

The Future of Risk Management and Compliance 2023 report highlighted the areas that are forecasted to experience intense regulatory evolution over the next 12 months. It was compiled by experts from the legal landscape, tech world, and financial services, in order to gain a better understanding of the regulatory trends they predict will be the most impactful on the industry and drive the need for fully integrated risk management platforms.  

AML and financial crime efforts to be pursued aggressively 

In this excerpt from The Future of Risk Management and Compliance 2023 report, it shows how financial crime, particularly AML and CFT measures remains at the top of regulators’ agenda. Global tensions and instability, anti-money laundering, and counter-terrorist financing measures have become central to risk management for financial institutions, and businesses need to protect against such risks in an increasingly digital world.

 

Crypto-1Crypto & Virtual Assets

Coinbase wins initial court battle, but SEC has options to delay explaining crypto rules 

Coinbase has won an initial victory in its campaign to make the US Securities and Exchange Commission (SEC) explain how it decides when cryptocurrencies should be considered securities., but the agency has several avenues it can take to push back.

Crypto exchange Bittrex files for bankruptcy in US 

Crypto exchange Bittrex has filed for bankruptcy in the US, weeks after being hit with charges by the SEC and months after saying that it would shut up shop in the US by the end of April, citing the “current US regulatory and economic environment”. 

EU Parliament paper raises doubts about the launch of a digital euro

According to a paper prepared for the EU Parliament, the risks of rolling out a digital euro currently outweigh the benefits and a CBDC should not be introduced unless “new elements ” emerge. A final decision on issuing a digital euro has yet to be made, with the European Central Bank already investigating options ahead of a potential launch. Meanwhile, the European Parliament’s Committee on Economic and Monetary Affairs called in the Economic Governance and EMU Scrutiny Unit to carry out its own assessment.

Israel seizes crypto accounts at Binance linked to ISIS and Hamas 

Israel has seized around 190 crypto accounts at crypto exchange Binance since 2021, including two it claims were linked to ISIS, while dozens more were owned by Palestinian firms connected to the Islamist Hamas group. The seizures by Israel’s National Bureau for Counter Terror Financing (NBCTF) highlight how governments are increasingly targeting crypto companies in their efforts to prevent illegal activity. 

 

Sanctions-1Sanctions

EU takes aim at Chinese firms in proposed new Russia sanctions 

The European Union is preparing a new round of sanctions against Russia that will target companies and countries that are considered to be helping the Kremlin evade penalties, including China. This radical move is driven by the imperative need to improve enforcement and crack down on evasion, but doing so will require the application of extraterritoriality, a contested legal principle that can enable the EU to sanction entities that fall outside its jurisdiction.

EU seeking to extend its sanctions regime to include corruption 

The European Commission has presented a new anti-corruption package, which includes a proposal to extend the EU sanctions regime beyond human rights violations to encompass corruption acts committed anywhere in the world. Under the proposed framework, foreign nationals involved in corruption could be prohibited from entering the EU and subjected to asset freezes, while EU nationals would be barred from engaging in any economic transactions with them, which would align EU legislation with the US Magnitsky Act.

“We are sending a clear message that the EU is not open for business to those who engage in corruption, wherever that occurs,” 
Josep Borrell, Vice President, European Commission

Opinion: Give sanctions regime proper teeth to deal with dirty money 

The Global Magnitsky Human Rights Accountability Act has become an effective means of justice and accountability, meanwhile, British politicians have found yet another way to tackle the issue. On April 27, an amendment to the Economic Crime and Corporate Transparency Bill was tabled which imposes a duty to disclose funds and economic resources, to enable asset recovery under the Proceeds of Crime Act where there has been deliberate concealment.

800-page US dossier on Russia sanctions breaches handed to Cyprus

Cyprus has received an 800-page dossier from the US government detailing sanctions breaches by local individuals and entities that are alleged to have enabled the Russian billionaire, Alisher Usmanov, to conceal his immense wealth. As the island’s leadership vowed to push ahead with the prosecution of law and audit firms that had aided the oligarch, Washington released documents that amounted to a toolkit to facilitate the process.

Sanctions checks and GDPR – what’s the lawful basis for processing third party personal data? 

The latest SRA sanctions guidance suggests there are times when you may need to check whether or not a third party is subject to a financial sanction. Many businesses check their own clients using an Electronic Identification and Verification system (ED&I) and it raises the question of whether you can use the same system for third parties. This report states that it depends on your basis for processing, how your ED&I system works and what they say.

UK company set up in name of top Putin official

A UK company has been set up in the name of one of Vladimir Putin’s top officials in Russian-occupied eastern Ukraine despite him being under sanctions. Volodymyr Saldo is listed as the owner of a UK company, registered five months after he was sanctioned by the UK government in June 2022.

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