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What the EU’s New Money Laundering Directive Means for Online Casinos

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The European Parliament has recently voted to adopt amendments to the European Commission’s proposal for a new Anti-Money Laundering Directive.

The new directive intends to create more transparency in online transfers of money, and prevent money laundering activities being carried by individuals through online channels.

Although, online gambling operators feel that the new rules will affect them significantly more than anyone else. European online gambling communities are displeased with the decision and have cited unfair treatment among other reasons as cause for their disagreement.

We’ve taken a look at what the directive will mean and what the actual implications will be for operators of internet gambling sites in Germany, France and all other member states of the EU.

Transparency

The directives main intention is to make life much more difficult for criminals who operate in the EU, attempting to hide their illicit money under the guise of legitimate businesses; an activity which has been associated with online gambling operations repeatedly in previous years.

Transparency International, the global coalition against corruption, have previously called for improvements in the EU money laundering rules and claimed more information is required to identify the sources and keep track of funds passing through the European financial markets.

The coalition were recently quoted in a gambling news article as saying: “Information on who ultimately owns and controls companies, trusts and other legal structures needs to be made publicly available in registers across the EU.”

This is a fair point and most would agree steps should be taken to improve the situation, and make money movements more transparent; ultimately hoping to deter criminals from abusing the current system.

However, many in the industry of online gambling feel that the directive unfairly subjects their senior staff members to unnecessary obligations, which may consequently place those in charge in potentially dangerous situations.

Gambling beneficiaries put ‘at risk’

The new rules have created tensions between those arguing in favor of the benefits of more transparency, and those who claim the move will put the people at the top of the companies at a potentially serious personal risk.

EU Online Gambling Stats

•2015 annual revenue estimated at €13 billion

•Roughly 6.8 million consumers currently participate

•Online gambling is the fastest growing service in the entire gambling sector

The main concern for online and mobile casino operators is the proposed new requirement which will make it compulsory for the ultimate owners of companies and trusts to be listed on public registers in all EU countries. Members of the public will be able to freely register online and consult the database of registered owners; the prospect of which has cased alarm with gambling company beneficiaries over their rights to confidentiality, privacy and their personal security and safety.

The majority of these people are very wealthy individuals, and it can be easily argued that their concerns are not unfounded. The ease of access to the personal information of operators is also worrying, with full access granted following the only requirement of a simple registration; it is not clear yet if or how these concerns will be taken into account by local legislation in the EU countries.

Organizational opposition

It is important to remember that the proposal has a noble cause. Anonymous shell companies and trusts play a central role in laundering money, concealing the identity of corrupt individuals and irresponsible businesses involved in activities including the trafficking of arms, drugs and people, the theft of public funds, and tax evasion. Nobody is debating that this is an issue that requires action.

The plans will also affect others out-with the gambling industry. The proposed rules will require banks, financial institutions, auditors, lawyers, accountants, tax advisers and real estate agents, among others, to be more vigilant about suspicious transactions too.

However, the largest global online gambling trade organization, the Remote Gambling Association, failed to see how the Parliament came to the decision to impose such strict conditions on online operators alone. Clive Hawkswood, the RGA’s Chief Executive, said that: ‘as an industry we are never complacent, but quite simply there is no justification for singling out our sector for this kind of treatment.’

Hawkswood added: ‘We hope now that the EU Council will reject the Parliament’s position on this issue and that the European Commission will defend its original stance.’

In terms of changes to the current services offered, the new directive should have little impact or influence. It is assumed that online casinos and gambling sites will continue to operate, as long as the operators adhere to any required rules which become fully passed and legalized.

Although there is debate and concern over the sharing of information relating to the owners of the companies publicly, it can safely be presume that should it become a legal requirement, most will comply; after all there are billions to be made every year, and it’s difficult to believe that those who currently have access to the market would let it slip from their grasps.

Decisions will likely be made in coming months following the European Parliamentary Elections, and despite the fuss, online gambling will no-doubt continue throughout the EU.

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