Continuing his discussion with Payment Expert, Luis Perez, Chief AML Officer at Lottofy and Clobet, shares more insights into the intricacies of anti-money laundering (AML) in the igaming sector, looking at some of the industry’s biggest jurisdictions.
A speaker at the Payment Expert Summit in Lisbon later this year, part of the wider SBC Summit, Perez explains how Lottofy traverses the complex world of global AML. In particular, the standards of the G7’s Financial Action Task Force (FATF) and the impact these have on key gaming markets, need to be understood.
PE: Aside from Malta, what other gaming jurisdictions have been under the spotlight on AML regulations, in your experience?
LP: In my opinion, other jurisdictions like the Isle of Man and Gibraltar are also recognised for their robust AML regulations and practices. These regions, often reflecting the FATF recommendations, have developed sophisticated measures to combat financial crimes within the gaming industry.
In the Isle of Man, for example, the AML framework includes comprehensive measures such as risk assessments, customer due diligence (CDD), continuous monitoring of transactions, record-keeping, and reporting any suspicious activities to the authorities. This structured approach ensures that financial transactions within their gaming entities are systematically scrutinised to deter and detect money laundering.
Similarly, Gibraltar boasts a rigorous AML system, marked by stringent CDD protocols, enhanced due diligence for higher-risk clients, and mandatory AML audits. These audits are crucial for identifying and rectifying any gaps in their AML strategies, thus maintaining a high level of compliance. Moreover, Gibraltar’s AML regime emphasises the transparency of client transactions and financial dealings, aligning closely with the FATF standard.
To maintain international standards, both the Isle of Man and Gibraltar incorporate the FATF’s risk-based approach as a cornerstone of their AML framework. This approach mandates that countries identify and understand the specific money laundering and terrorist financing risks they face, allowing them to allocate resources efficiently and mitigate the most significant threats.
The FATF’s influence extends globally, setting a unified framework that jurisdictions adhere to in order to combat financial crimes. Their recommendations cover several key areas including customer identification programmes (KYC/CDD), monitoring and reporting of transactions, and maintaining robust record-keeping mechanisms. Jurisdictions like the Isle of Man and Gibraltar actively incorporate these guidelines to fortify their AML structures.
For instance, within these jurisdictions, CDD processes involve detailed verification of customer identities, ensuring a thorough check against any involvement in criminal activities. Enhanced due diligence is applied in high-risk scenarios, examining the sources of clients’ funds and maintaining ongoing scrutiny of their financial behaviour.
These practices are not limited to customer verification. Both regions emphasise independent AML audits, which provide a third-party assessment of AML strategies and ensure compliance before regulatory inspections. This pre-emptive approach helps rectify any shortcomings and strengthens AML safeguards against evolving financial crimes.
Moreover, these measures align with FATF standards through continuous adaptation to the FATF’s updated guidelines and mutual evaluations. The mutual evaluations, which assess both effectiveness and technical compliance, play a vital role in ensuring jurisdictions meet global AML criteria. Through these evaluations, jurisdictions identify areas needing improvement and continuously evolve their AML frameworks to remain compliant with international standards.
PE: How has Lottofy navigated varying AML requirements across the international markets it operates in?
LP: Navigating the labyrinth of AML requirements for an international remote gaming company licensed in Malta, such as us, involves a multi-faceted approach that complies with local and international regulations. These companies must comply with Malta’s Prevention of Money Laundering Act (PMLA), the Prevention of Money Laundering and Terrorist Financing Regulations (PMLFTR) and the Criminal Code, as well as ensuring compliance with FATF guidelines in various jurisdictions.
A critical first step is conducting comprehensive AML risk assessments. This process involves documenting key risk indicators, employing dedicated AML compliance staff, identifying inherent risks, determining residual risks, and rating these risks to prioritise mitigation strategies.
Given the nature of the remote gaming sector in which Clobet Limited operates, particular attention should be focused on those activities within the entity’s offering that may contain a higher component of AML risk, such as transactions within the casino vertical (slots, progressive slots, scratch cards and live casino). Although the lottery is certainly an activity that tends to carry a lower AML risk index, an inherent and vertical risk management process should be implemented for these transactions as well, providing due diligence control and monitoring thereof.
Implementing robust CDD procedures is essential. This includes verifying customer identities using electronic checks, ID verification, and geocoding checks to ensure the legitimacy of customers and beneficial owners. CDD measures must be tailored to various risk factors, such as countries with high corruption levels or those under international sanctions.
Transaction monitoring systems play a crucial role in identifying suspicious transactions. These systems need to be sophisticated enough to flag potentially illicit activities without tipping off the customers, which can compromise ongoing investigations. Simplified CDD measures may be employed in lower-risk scenarios, but institutions must maintain diligence to prevent any lapses in compliance.
Staff training is another cornerstone of an effective AML strategy. Employees must be educated on the nuances of background checks, AML software, and regulatory requirements to adapt to ever-changing financial crime landscapes. Continuous learning ensures that staff can recognise red flags and understand the implications of non-compliance on the company’s operations and reputation.
By integrating these elements -risk assessments, CDD procedures, transaction monitoring, and staff training – an international remote gaming company like us can comply with both Maltese law and global AML standards, creating a secure and compliant gaming environment.
PE: Are there any technologies which are revolutionising the way operators handle AML duties?
LP: At our Malta-based gaming company, we’re witnessing a groundbreaking transformation in how we tackle AML obligations, all thanks to cutting-edge technologies like artificial intelligence (AI) and machine learning (ML). These innovations aren’t just streamlining our processes; they’re revolutionising our entire approach to AML compliance, offering us sharper accuracy, boosted efficiency, and seamless adaptation to ever-evolving regulations.
With AI and ML leading the charge, we’re automating AML procedures like never before, swiftly spotting suspicious activities and refining our CDD protocols. It’s like having a vigilant watchdog that tirelessly sifts through vast amounts of transaction data, pinpointing potential red flags with unmatched precision. Plus, AI-driven platforms are simplifying our KYC processes, ensuring consistent compliance and minimising the risk of human error – a game-changer, quite literally!
But it doesn’t end there. Advanced data analytics, including predictive analytics, are offering us invaluable insights into customer behaviour and transaction patterns, allowing us to tailor our AML strategies with laser-focused precision.
Of course, none of this would be possible without collaboration – within our team, with financial institutions, and alongside regulatory authorities. Together, we’re sharing information, engaging in joint training initiatives, and staying one step ahead of illicit financial activities. It’s all about fostering a culture of vigilance and proactivity, ensuring that every member of our team is equipped to combat financial crimes effectively.
And let’s not overlook the importance of regulatory compliance. Adhering to international standards set by entities like the FATF isn’t just a requirement; it’s a commitment to integrity and trust within the gaming industry. By staying compliant, we’re not just protecting our operations – we’re safeguarding our reputation and maintaining the trust of our players.
In essence, the integration of AI and ML isn’t just a technological advancement for us – it’s a testament to our dedication to excellence and innovation in AML compliance. It’s about staying ahead of the curve, adapting to new challenges, and ensuring a safe and secure gaming environment for all.
PE: Luis, thanks for speaking with us about these topics. To conclude, what do you think operators will gain from attending the Payment Expert Summit when it comes to learning about AML?
LP: As a member of the gaming industry, I understand the critical role that staying informed plays in our AML practices. Attending events like the Payment Expert Summit isn’t just about adding another conference to our calendars; it’s about equipping ourselves with the latest insights and tools to combat financial crimes effectively.
At the summit, we’re not just attendees; we’re participants in a dynamic exchange of knowledge and expertise. Rubbing shoulders with industry leaders offers us a firsthand understanding of the ever-changing regulatory landscape and emerging trends in AML compliance.
Moreover, exploring innovative technologies isn’t merely an academic exercise; it’s about discovering practical solutions to enhance our AML processes and mitigate risks.
Networking opportunities at the summit aren’t just about making casual connections; they’re about cultivating meaningful relationships with peers and experts. These connections can prove invaluable as we navigate the complexities of AML compliance and risk management in our industry.
In short, I believe that attending the Payment Expert Summit is an investment in our professional development and the integrity of our operations. It’s where we gain the knowledge, insights, and connections needed to stay ahead in the fight against financial crimes, ensuring the continued success and reputation of our company.
The Payment Expert Summit, part of the upcoming SBC Summit, will be held at the Feira Internacional de Lisboa from September 25-26. Secure your spot with the Early Bird ticket offer, which provides access to all three core days of the event, including the exhibition floor, conference sessions, and evening networking parties, all for the discounted price of just €400.
