Panama Papers: Licensed casinos ‘not being exploited for money laundering’

Panama Papers: Licensed casinos ‘not being exploited for money laundering’

Tuesday, April 11, 2017
ECA chairman, Per Jaldung

Following the publication of a study entitled ‘Offshore activities and money laundering: recent findings and challenges’, compiled for the European Parliament Committee of Inquiry on the Panama Papers, the European Casino Association (ECA) has reiterated the fact that there is no proven evidence of properly licensed casinos in the EU successfully being exploited for money laundering.

The report for the European Parliament was published last month following the well-publicised leak of 11.5 million documents relating to offshore entities linked with Panamanian law firm and corporate service provider, Mossack Fonseca, in 2015 – dubbed the Panama Papers.

Two potential scenarios were described in the report that referred to the operation of casinos for money laundering. The first involves a launderer “cleaning cash” by converting it into chips at a casino. They then exchange the chips back into cash to deposit at a bank, with the cheque from the casino showing a legitimate transaction.

“This scenario is entirely unfeasible in licensed land-based casinos in Europe,” the ECA stated. “As the study rightly says, a confirmation of winnings from the casino – in the described scenario a cheque – is crucial for a money laundering scenario to be successful.

“However, properly licensed land-based casinos in Europe do not issue any confirmations of winnings, let alone cheques, to patrons. The only rarely-used exception to this rule would be if a patron wins a slot machine jackpot or a substantial amount of money during a longer casino visit. This confirmation would then normally be in the form of a money transfer to the player’s bank account, which would be done for security reasons, as such high amounts are usually not paid out in cash. The money transfer would be subject to strict conditions and reporting rules.”

The association added: “Furthermore, if a patron were to request such a confirmation of winnings in a licensed casino in Europe, this would immediately raise the alarm for casino staff. The case would then automatically be reviewed, and the person who had requested such a confirmation would be checked and if necessary a suspicious transaction report filed with the authorities. This would result in substantial exposure for the criminal involved.”

The report also stated that a launderer could also potentially own a casino and claim that the large amounts of cash held are profits from the casino.

Concerning the described risk of infiltration of ownership of casino operations by criminals wanting to launder money, the ECA noted that national licensing systems in Europe guarantee that the ownership – and any change in ownership – is according to national laws and regulations.

“These arrangements are laid down in the national laws and regulations in every EU Member State,” the association said. “These measures include strong and serious fit-and-proper checks by the national regulatory authorities, as well as checks concerning the origin of the funds involved and vetting of operators, key staff and high-ranking employees at licensed casino operations. All these measures have been implemented by EU member states to successfully eliminate the scenario described in the statement.”

In summarising the above, the ECA stated that to its knowledge there is no proven evidence of properly licensed casinos in the EU successfully being exploited for money laundering.

“In order to ensure a comprehensive and effective approach against money laundering, it is crucial that operators of gambling services are only allowed to operate in jurisdictions where they have obtained a licence,” ECA chairman Per Jaldung told TotallyGaming.com.

“This is equally important in order to guarantee a responsible approach to the provision of gambling, something that is commonplace in the land-based casino industry. National governments and gambling regulators therefore have to take strong action to ensure that unlicensed operations are not able to operate in their country.”

Jaldung added: “Casinos are often mentioned with regard to the issue of money laundering. However, due the tight external and internal controls these licensed operations are facing in their respective jurisdictions, the ECA does not have any knowledge of proven evidence that properly licensed casinos in the EU have successfully been exploited for money laundering.”

Totally Gaming says: Casinos represent one of the most highly regulated industries in the world, and the ECA continues in its quest to combat illicit operators across Europe. While the scenarios described in the report are entirely hypothetical, the fact that there is no proven evidence that properly licensed casinos in the EU have been exploited for money laundering acts as a clear indicator that the industry’s AML strategy is indeed working.

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