The gambling industry, including online casinos and sports betting, plays a significant role in the global economy, generating billions in annual revenue. However, its high cash turnover and potential for anonymous transactions make it an attractive target for money laundering. Criminals take advantage of the sector to disguise illicit funds as legitimate gambling proceeds, underscoring the need for strong Anti-Money Laundering (AML) controls.
Gambling operations present several inherent financial crime risks. Casinos and online platforms handle substantial cash volumes, providing opportunities for criminals to deposit illicit funds and withdraw them as winnings. Online gambling allows users to create anonymous accounts and utilise third-party payment processors, making transactions harder to trace. Cryptocurrencies further complicate monitoring, as certain platforms accept Bitcoin for deposits and withdrawals with minimal identity verification. Many operators function across multiple jurisdictions, exposing them to varying regulatory frameworks. Offshore gambling sites, in particular, may operate in countries with weak AML enforcement, increasing the potential for financial crime.
Regulators worldwide have implemented stringent AML measures to address these risks. Failure to comply can lead to significant fines, license revocation, and reputational damage. The Financial Action Task Force (FATF) sets global AML standards, with Recommendation 22 requiring casinos to implement Customer Due Diligence (CDD) for transactions exceeding €3,000. Operators must also report suspicious activity to Financial Intelligence Units (FIUs).
The EU’s 5th AML Directive (5AMLD) extended AML obligations to online gambling operators. It mandates customer verification, requiring operators to confirm customer identities and apply Enhanced Due Diligence (EDD) for high-risk clients. Suspicious activities must be reported, even if they fall below formal reporting thresholds, and high-risk customers, including Politically Exposed Persons (PEPs), must provide proof of legitimate fund sources.
As an EU member state, Cyprus follows EU AML directives while enforcing local regulations through the Cyprus Gaming and Casino Supervision Commission (CGCSC). Gambling operators in Cyprus must verify customer identities for transactions exceeding €2,000, report suspicious activities to MOKAS, the Cyprus FIU, and implement comprehensive AML programs. These programs include appointing a Money Laundering Reporting Officer (MLRO), conducting internal audits, and ensuring ongoing AML training for employees.
With the continued expansion of online and mobile gambling, operators must enhance their AML compliance programs. Keeping up with regulatory changes, strengthening due diligence procedures, ensuring the timely reporting of suspicious transactions, and conducting regular audits and staff training are essential to maintaining a strong compliance culture. A well-structured AML framework not only helps prevent financial crime but also safeguards business reputation and fosters trust with customers and regulators.
MK Compliance Limited offers support to help gambling operators with their AML compliance requirements. Our services include the drafting of tailored AML manuals and procedures, transaction reviews, customer due diligence assessments, and in-depth background checks on clients, entities, and counterparties to identify and mitigate financial crime risks. By strengthening compliance frameworks, we help businesses align with AML regulations and reduce exposure to enforcement actions.
For professional assistance in meeting AML regulatory requirements, contact us at info@compliancemk.com.
