The Fourth AML Directive within the Gaming Sector

The EU’s fourth Anti-Money Laundering Directive, which needs to be transposed into Maltese national law by the 26th of June 2017, upgrades existing regulations to combat money laundering and counter terrorist financing. This Directive expands the inclusion of all gaming sectors in addition to land-based casinos. By doing this, the EU’s 4th AML Directive clarifies the standing of the gaming industry to a large degree, and presents a number of recommendations to member states. Besides expansion to the gaming industry, the directive is focusing more on a more holistic risk based approach on a case-by-case basis in the fight against money laundering and terrorist financing.

CSB Group has organised the EGR Business Breakfast jointly with the Malta Gaming Authority which discussed the 4th EU Anti-Money Laundering Directive vis-à-vis the Gaming Industry. The well attended event entailed a discussion between a panel of Experts: Dr Johnathan Phyall, Senior Legal & International Relations Officer, FIAU,  Dr Dominic Micallef, Chief Officer – Enforcement, MGA,  Dr Corinne M. Valletta, Head of EU & International Affairs, MGA and  Insp. Sean Scicluna, Malta Police Inspector, ECU. Leading the event was Mr Michael Parlato Trigona, as a Compliance Officer at CSB Group.

The panel explained how iGaming operators with a  Malta Licence will now be classified as obliged entities/subject persons upon the transposition of the 4th AML Directive into our national legislation. Therefore, the operators within the gaming industry are now subject to all requirements of obliged entities. A gaming operator must conduct due diligence in the event of occasional transactions in the amount of €2 000, whether carried out in a single transaction or several transactions. In the event where due diligence, verifying the identity of the customer, has not been previously conducted, this will set a requirement for the checkpoint at the lifetime total of €2,000 on the account.

Each Operator, as an obliged entity, will be required to maintain an AML program, including policies, training, record keeping, on-going monitoring and risk-based assessments to determine the level of due diligence necessary.

As an obliged entity, an annual compliance report must be filed with the FIAU. This report would entail a snapshot of the work that the Operator undertook in order to fight money laundering and the financing of terrorism. This would include the number of suspicious transaction reports filed, the training attended by the employees and summary of policies in place.

The Financial Intelligence Analysis Unit (FIAU)’s implementing procedures, Part I, are a good starting point in designing the strategy, while also providing valuable insight into the expected approach. Part II of the implementing procedures is currently in progress and the Malta Gaming Authority (MGA) is collaborating with the FIAU on such procedure.

Undoubtedly, due to the fact that this Directive is more onerous on the Operators, it will result into more work and a demand for more resources. It would be safe to say that in the short term, applying the new directive will present a challenge for the regulators and regulated entities, not only in the gaming sector. On the other hand, the continued evolution towards a risk-based approach means that organisations that succeed in deploying their resources effectively should succeed in managing their AML risks more effectively without upsetting the customer experience.