The Danish Gambling Authority s guideline on preventive measures against money laundering and terrorist financing in the casino sector

Transcription

1 The Danish Gambling Authority s guideline on preventive measures against money laundering and terrorist financing in the casino sector

2 Table of content 1. Preamble Laws, regulations and guideline Risk assessment of the casino company Risk management and the use of a risk based approach Risk factors for online casino Risk factors for land-based casino Internal rules Know your customer online casino Registration of costumers Verification of the customer s identity Politically exposed persons residing in another country Storage of identity information etc Updating of information while the customer relationship is ongoing Know your customer land-based casino Registration of players Identification of the player Identification after arrival Awareness duty Awareness duty for online casino Large transactions Unusual and complex transactions The FATF-list Awareness duty for land-based casinos Monitoring of players Particularly for online casino Monitoring on land-based casinos Examination and noting duty Examination duty

3 8.2 Noting duty Notification Notification to the State Prosecutor for Serious Economic and International Crime Suspending online casino transactions Notifying the Danish Gambling Authority Storing of documents and registrations Internal control Education and instruction programs Confidentiality Penalty clauses

4 1. Preamble The gambling area regulations on preventive measures against money laundering and terrorist financing shall contribute to the combat of crime by limiting the possibilities of abusing the casino business for money laundering and terrorist financing purposes, easing the police s crime investigation, and preventing the remittance of criminal proceeds into the legitimate national economy. Money laundering includes transactions and activities concerning the proceeds of crime, including receiving profits and actions carried out in order to hide the funds origin, movement, ownership etc. or in any other way secure the proceeds. Using proceeds of crime in gambling is therefore among other things covered by the definition of money laundering. Terrorist financing includes giving direct or indirect financial support to mobilise or collect funds to - or financial services set at the disposal for persons, groups or organisations that have committed or intend to commit terrorist acts. For both online and land-based casinos there are rules concerning the efforts taken against money laundering and terrorist financing. The money laundering regulations do not cover the revenuerestricted licences1 to online casino. Moreover, the regulations do not apply when providing other types of games such as betting or land-based provision of gaming machines. The guideline includes instructions on how the regulations must be met by the licence holders, employees and other staff members involved in the casino activity. With regards to the areas in which it is up to the above-mentioned groups to carry out a risk assessment, the guidelines include instructions on how the regulation requirements can be met. The regulations on preventive measures of money laundering and terrorist financing are risk based. This means that the casino company must arrange internal procedures on the basis of the its business model and the estimated risk of the company being abused to launder money or finance terrorism. A risk based approach requires that the casino has a good understanding of the existing risks and is capable of executing reasonable judgment. This requires accumulating expertise through e.g. education, guidance, professional counselling and learning by doing. The casino is obligated to report to the State Prosecutor for Economic and International Crime (SEIC) on for example customers who have financial funds whose origin cannot be directly explained, even though the transaction itself will not immediately contribute to money laundering. 1.2 Laws, regulations and guideline The guideline describes the regulations of the: Act on Gambling no. 848 of July Executive order on online casino order no. 67 of January A licence with a maximum duration of 1 year where the gross gambling revenue does not exceed DKK 1 million. 4

5 Directive 2005/60/EF of the European Parliament and of the Council of October on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing Executive order no of the Danish Financial Supervisory Authority of December on countries and territories where there is deemed to be a certain risk of money laundering or terrorist financing (the FATF-list). The Danish Gambling Authority has prepared legal guidelines on the gambling act and its executive orders, which gives an overview over the use of the different legal acts in the area of gambling. The legal guidelines can be found on spillemyndigheden.dk Legislation. Moreover, guidelines on the registration of players etc. can be found in the Danish Gambling Authority s Guideline on betting and online casino. Further guidance concerning money laundering and terrorist financing can be found in the typology reports that are continuously being prepared and published by FATF 2. The reports from FATF include risk studies of particular areas, businesses, products etc. using the so-called suspicion indicators. These reports can be found on FATF s homepage. Risk-Based Approach Guidance for casinos on how online and land-based casino providers can use the risk based approach to make an assessment of players, etc. in order to prevent and stop money laundering and terrorist financing. Vulnerabilities of Casinos and Gaming Sector identifies the land-based casino providers vulnerable areas where a particular risk of money laundering and terrorist financing is present. In the section below you will find a list of general examples of how the casino sector can be abused by criminals. In the FATF-report on the casino sector there are more examples of and more information about the risk factors of the business. The use of chips as payment in illegal transactions Criminals may wish to exchange money into chips which they can afterwards use as payments in illegal transactions. The chips can contribute to strengthening the alibi of the criminal as they indicate that the funds originate from casino visits and not from a criminal action. Purchase of chips By having credit-card receipts showing that a large amount of money has been spent on a casino, the criminal can try to hide criminal earnings by making them appear as casino prizes e.g. by buying chips, but not using them for gambling. Similarly, criminals can be interested in buying chips from other players in order to have funds appear as prizes. 2 Financial Action Task Force (FATF) is an independent international organization which develops and promotes ways to protect the global financial system against money laundering and terrorist financing. The FATF-recommendations are recognized as the global standard for combatting money laundering and combatting terrorist financing. Recommendations from FATF are built upon a risk based approach to the fight against money laundering and terrorist financing. 5

6 Transfer of funds to other accounts The criminal can hide the origin of funds by placing the funds on a gambling account through one type of payment and afterwards have the amount paid out through another type of payment. This is especially evident when payments are carried out with prepaid cards. Platform games When playing in networks criminals can be interested in losing on purpose to other players in order to make funds appear as prizes. 6

7 2 Risk assessment of the casino company It is the responsibility of the casino company s top management to secure that the company complies with the money laundering regulations. The management should secure that their involvement in subjects concerning money laundering and terrorist financing is visible to the board and all employees and business partners. Management has a personal responsibility to secure that sufficient control measures and working procedures are in place in the casino. The casino company must appoint a person from management who must secure that the company complies with the regulations. Online casinos must have the person responsible approved by the Danish Gambling Authority. If a new person is appointed, the Danish Gambling Authority must approve the person in question. If changes are made, use form Changes of the licence to provide betting and online casino - which you can find on the Danish Gambling Authority s homepage Forms. 2.1 Risk management and the use of a risk based approach The regulations stipulate that a casino must have sufficient internal rules about controls, risk assessment and communication, also called risk management. The casino s risk management in relation to money laundering should be based on the casino s business model and the possible risks of the casino being abused for money laundering or terrorist financing purposes. The casino should start from above by making a qualified analysis of the extent to which its business model and business activities carry the risk of the casino being exploited in the form of money laundering or terrorist financing. The risk assessment should be based on an analysis of e.g. The company s customer types. Products. Deliverance systems i.e. the way that the company makes its products available to customers (by physical appearances, the Internet, etc.). Business and transactional scope. Geographical risks. Based on the overall risk assessment the casino must determine a risk management policy that is approved by the management. Risk assessment and risk management policy should be written down and reviewed regularly. Risk management is used to assess whether a transaction might have or has had a connection to money laundering or terrorist financing after which the licence holder examines the transaction more closely. Based on the risk management the casino must adopt different working procedures that are customized to reduce the risk of money laundering and terrorist financing. The strategies that are established to handle money laundering and terrorist financing in the casino should be designed in a 7

8 manner that makes it possible to identify or prevent illegal activities. This can be done through a combination of deterrent measures such as: Evaluation of customer and transactional risks. Handling the customer s account. Appropriate identification measures for players. Storing of the registrations that can be useful in criminal investigations. Disclosures, e.g. surveillance and reporting of suspicious activities and transactions Risk factors for online casino A different range of factors can influence the risk level of the casino. Some of or all of the risk factors mentioned below can influence the extent of risk in the casino and influence the preventive measures that are necessary to effectively, but proportionately, manage these risks. Examples of risk factors could be: The possibility of temporary player accounts. The type of players regardless of whether they are regular players, including VIP-players or occasional players. The provision of multilayer games, where you play against other players. Types of payment methods that are accepted by players, including receiving prepaid cards. Types of games being offered to players, e.g. card games and roulette. Type and efficiency of the existing monitoring mechanisms (electronic and/or physical). If the business model of the casino concerns one of the following options or them both: - Attracts a large amount of players who play for relatively small amounts, or - Attracts a smaller amount of players who play for relatively large amounts. More examples are to be found in the FATF s typology reports. In the section below some of the risk factors will be described. Temporary accounts Until the costumer s identify is verified, the person in question is a high-risk customer as the casino has not yet obtained the necessary information about the customer. Down payments from one temporary account to another account different from the one which the money was put into, constitute a risk. The same is present if the customer has established a temporary account several times. The use of temporary accounts hereby constitutes a risk factor that must be included in the risk assessment. Player categories where activities may indicate an increased risk Different player types that may present an increased risk are listed below. 8

9 Players who are politically exposed persons See section Players who spend large amounts (big players) Big players are a risk factor since it can be difficult for the casino to estimate the origin of their funds. The definition of a big player can vary according to the casino in question. Generally, players can be regarded as big players on the basis of their total gambling consumption in a given period of time. Accordingly, every day players who play for a relatively large amount at limited occasions can be regarded as big players. Big players can also be players who on a single visit spend a very large amount of money. The casino must have guidelines regarding big players and have individual assessments of what constitutes a big player. These guidelines can cover commercial risks or marketing in order to identify big players. The casino must ensure that the guidelines concerning money laundering and terrorist financing are used consistently according to all big players. A casino must have an understanding of the origin of the big players income or fortune. The casino must prepare guidelines on how the casino can obtain knowledge of the players financial resources. These guidelines should be based on a risk based decision made by the casino. Information on income and fortune can give certain insights into the likely level of available assets at the players disposal. The casino should also be aware of players who engage in big gambling when this does not correspond with the player s gambling profile. The casino should also be aware of the sources of the player s assets and/or income or the player s occupation. If and when this information is obtained, the information can contribute to the assessment of whether a customer s level of gambling is reasonable compared to the assets or income level. For example, it might be sensible to examine a big player with relatively modest assets or income. Occasional players Occasional players, including tourists, can present an increased risk of money laundering or terrorist financing as it can be difficult to determine whether their transactions deviate from their normal behaviour. Included in this category are also regular players who might pose a risk if their gambling consumption changes, e.g. if their consumption increases dramatically or if their gambling pattern does not match their player profile. Methods of payment Prepaid cards The same risks exist when it comes to receiving prepaid cards and receiving cash as casinos do not have the possibility to exercise the same control when it comes to prepaid cards compared to regular bank accounts. If prepaid cards are received, it must be included in the risk assessment. Customers who often use prepaid cars should therefore be categorised as high-risk customers. Electronic wallets (e-wallets) 9

10 E-wallets that only accept money from bank accounts in the name of the customer would normally not pose any greater or lesser risk in relation to money laundering or terrorist financing compared to situations when the funds are received directly from a bank. Network games Online poker games often take place through different platforms. These platforms can be vital when monitoring whether patterns and values of a game might indicate potential money laundering activities e.g. chip dumping. The casino and the platform must have clear rules with regards to their respective roles, notifications, inquiries and consequent actions concerning money laundering and terrorist financing. In games where players play against each other there is an increased risk of funds being transferred between players, which can lead to the origins of the funds being blurred. These games might therefore constitute an increased risk. IT-systems Online casinos are dependent on IT-systems. These IT-systems should be adjusted in order to secure accurate supervision of accounts and players and secure that the necessary information is registered and stored. A risk based approach can however not be entirely dependent upon ITsystems thus there is also a need for human supervision and staff equalling the risk level in the casino Risk factors for land-based casino A different range of factors influence the risk level of the casino. Some of or all of the risk factors mentioned below can influence the extent of risk in the casino and influence the preventive measures that are necessary to effectively, but proportionately, manage these risks. Examples of risk factors could be: Players residing abroad, including especially players from countries which are not in the EU/EEA or not included on the FATF-list. Payment methods, including cash. The player s total number of transactions and/or transaction sizes which are large when compared to the casino s resources, which makes surveillance difficult. Players who are reluctant to give out information. Occasional players, including tourists. The size of the casino rooms. The location of the casino. VIP-rooms and other facilities reserved for big players. If the casino s business model concerns one of the following possibilities or both: - Attracts a great number of players who play for relatively small amounts, or - Attracts a smaller number of players who play for relatively large amounts. Types of payment methods accepted by the players. Types of games offered to the players e.g. card games and roulette. The employees level of experience. Types and effectiveness of the existing surveillance mechanisms (electronic and/or physical). 10

11 More examples can be found in the FATF typology reports. In the section below some of these risk factors will be described. Player categories where activities may indicate an increased risk Different player types that might present an increased risk are listed below. Players who spend large amounts (big players) Big players are a risk factor since it can be difficult for the casino to estimate the origin of their funds. The definition of a big player can vary according to the casino in question. Generally, players can be regarded as big players on the basis of their total gambling consumption in a given period of time. Accordingly, every day players who play for a relatively large amount at limited occasions can also be regarded as big players. Big players can also be players who on a single visit spend a very large amount of money. The casino must have guidelines regarding big players and have individual assessments of what constitutes a big player. These guidelines can cover commercial risks or marketing in order to identify big players. The casino must ensure that the guidelines concerning money laundering and terrorist financing are used consistently according to all big players, regardless of whether it is big players who e.g. have a VIP room or similar. A casino must have an understanding of the origin of the big players income or fortune. The casino must prepare guidelines on how the casino can obtain knowledge of the players financial resources. These guidelines should be based on a risk-based decision made by the casino. Information on income and fortune can give certain insights into the likely level of available assets at the players disposal. The casino should also be aware of players who engage in big gambling when this does not correspond with the player s gambling profile. The casino should also be aware of the sources of the player s assets and/or income or the player s occupation. If and when this information is obtained, the information can contribute to the assessment of whether a customer s level of gaming is reasonable compared to the assets or income level. For example, it might be sensible to examine a big player with relatively modest assets or income. Occasional players Occasional players, including tourists, can present an increased risk of money laundering or terrorist financing as it can be difficult to determine whether their transactions deviate from their normal behaviour. Included in this category are also regular players who might pose a risk if their gambling consumption changes, e.g. if their consumption increases dramatically or if their gambling pattern does not match their gambling profile. Misuse of a third party Criminals might use a third party, including anonymous persons or agents, in order to avoid 11

12 identification at the entrance. A third party can also be used in games, e.g. to break up large cash amounts. It might also be the case that a third party is used to buy chips or to play on behalf of others or for cash pay-outs/ redemptions of chips for a larger cash amount, casino checks etc. Casinos must therefore have procedures in place that enable employees etc. to be aware of whether a player only acts on his own behalf and of whether an organised exchange of chips, money etc. between casino customers is taking place. Loan sharks The casino might have a problem with loan sharks, which occasionally includes threats of violence. Loan sharks lend money to individuals at rates that are above the legal maximum lending rate, and they might be financed or supported by organised criminal networks. A loan shark often approaches people who are having financial difficulties or for some reason do not wish to lend money by legal means. Cash At a land-based casino players can exchange large sums of illegal profit into large bills that are easier to hide or transport. Certain cash deposits from a customer, namely cash deposits, which are seen to be relatively large in comparison to either 1) a specific casino s average deposit, or 2) what is known of the customer s financial situation, can also provide a risk factor. Cooperation with others If the casino has for example commercial events, the casino must make sure that business partners, and the employees of the business partners, are honest and reliable. This would also be an advantage in relation to the prevention of money laundering or terrorist financing. 12

13 3 Internal rules The casino must prepare adequate written internal rules within the area of money laundering. The internal rules should be based on the casino s own settings i.e. a risk assessment of the business model and game types etc. The internal rules must also contain a description of what is understood by money laundering and terrorist financing and how one could imagine it taking place within the casino company in question. In addition, the internal rules must include a description of the requirements that are in force in relation to the Executive order on online casino and the Executive order on land-based casinos. The internal rules can consist of a collection of documents which together form the internal rules. It is not a requirement that there must be a comprehensive document even though this would be recommendable. It is not sufficient to just incorporate a copy of the money laundering directive, acts or already existing guidelines or suggestions to guidelines which alone do not give the employee sufficient information on how the rules must be administrated in the casino. The Danish Money Laundering Secretariat under the State Prosecutor for Serious Economic and International Crime (SEIC) has worked out an overview of possible indicators in concrete customer relationships that might give rise to deliberations concerning money laundering or terrorist financing. These deliberations might result in a notification of the State Prosecutor for Serious Economic and International Crime (SEIC) if they lead to a suspicion that cannot be denied upon closer examination. The internal rules of the casino could be based on a list of these indicators, to the extent that they are relevant, and on other indicators of relevance to the casino. The updated written rules of the casino must be accessible to the employees. 13

14 4 Know your customer online casino 4.1 Registration of costumers In order to participate in online casino a player must be registered as a customer. In relation to the registration, the player must state the following information: Name Address Social Security Number This information is also referred to as identification information. By this is understood actual information about a person. The customer himself must always provide the information. It cannot be completed automatically when the customer e.g. types a Social Security Number. If the customer does not have a Social Security Number, similar ID-information must be obtained. This could be the personal registration number used by public authorities in the country in question, or, if such a number is not used, information on date of birth combined with place of birth. By customers without Social Security Number is meant customers who actually do not have a Social Security Number. Customers without Social Security Numbers are e.g. tourists staying in Denmark. If the customer does not wish to disclose the Social Security Number or similar information, the person cannot be established as a player. The registration of the customer is dependent on the customer acting only on his own behalf. When the customer has given the required identity information, a temporary account can be set-up as described in the Executive order on online casino 6. Information about the intended extent of gambling At the time of the registration the licence holder must gather information on the intended extent of gambling of the player. The information must be gathered from the player himself. The casino can therefore not on its own estimate the expected gambling extent by looking at the player profile. The casino can, however, give the player options of choice in the form of e.g. predefined categories. The player must always specify the extent of gambling. The information must be used in order to monitor the customer relationship, see below. 4.2 Verification of the customer s identity It is a basic demand that the casino has knowledge of its customers. The casino must therefore be convinced that the customer is who he claims to be. There cannot be circumstances that raise doubt as to whether the customer is who he claims to be. The minimum standards for securing an identity are verification of name, address and Social Security Number. All three must be controlled, see below. 14

15 Documentation of the player s identity The information given by the customer must be controlled. The player s name, address and Social Security Number must therefore be verified by a reliable and independent source, e.g. the Social Security register. All three pieces of information must be verified. Thus, it is not sufficient that the Social Security Number and name are verified. All three pieces of information need not be verified by the same source. If a customer has a secret address, the address must still be verified. For customers without Social Security Number the name and address must also be verified, and documentation that substitutes the Social Security Number must be gathered. When verifying, the casino must be aware of the fact that e.g. a passport and driver s licence does not contain the home address. A copy of these documents will therefore not be sufficient. Supplementary documentation There are requirements of further supplementary documentation of the customer s identity as this is an online relationship, i.e. buyer and seller do not meet physically. Supplementary documentation could be: Use of verification information from a digital signature. Submission of photo-id. A requirement that the first payment is conducted through a money transfer from the customer s account in a financial institution where the customer has identified himself. The customer is contacted by phone as the telephone number must be verified by a reliable reference. A contract or similar is sent to the customer requesting that he signs and returns it. Photo-ID must originate from a reliable and independent source and will therefore typically be issued by the public authorities. Information on the photo-id must be current. The requirement of a digital signature when logging in does not apply to customers without a Social Security Number. When establishing a customer without a Social Security number, the customer s identity must always be secured in another way. Additional requirements by increased risk of money laundering and terrorist financing The casino is obligated to incorporate stricter procedures when an increased risk of money laundering and terrorist financing is estimated to exist. In every customer relationship the casino must prove to the Danish Gambling Authority that the extent of the examinations has been sufficient. The extent of the identification procedure must therefore be determined on the basis of a risk assessment in each individual case. Rejecting the creation of a gambling account A gambling account cannot be created if it has been revealed that the customer has given false information 3. The information can be corrected if the casino estimates that the customer has not intentionally given false information, e.g. the customer has not stated whether he lives in the right or left side of a building. 3 A customer giving false information can be deemed a suspicious activity that must be notified if the suspicion cannot be denied. 15

16 Setting up player accounts When the customer s identity has been sufficiently verified, the customer s account changes status from being a temporary account into being a final player account. Additional guidance The registration and verification of customers is also described in the Danish Gambling Authority s guidelines on betting and online casino chapter Politically exposed persons residing in another country 4 In connection to the registration of politically exposed persons (peps) there exists an increased risk of money laundering that is connected to corruption etc. For customers who fall under the definition of politically exposed persons and who are resident in another country, certain rules apply including the following: Requirements of particular procedures. Requirements of information on capital and income sources. Requirements of enhanced supervision. What is a politically exposed person? Politically exposed persons are defined according to the Act on Money Laundering and its belonging executive orders. This guideline is therefore in accordance with the Danish Financial Supervisory Authority s guideline on the Act on preventive measures against money laundering of profits and terrorist financing. Definition of a politically exposed person Persons who hold or have held a high-ranking public office, their immediate family members or people known as their close collaborators. The Danish Financial Supervisory Authority has defined the following examples of politically exposed persons: By politically exposed persons, who hold or have held a high-ranking public office, is understood: Heads of state, heads of government, ministers or vice ministers or deputy ministers Members of Parliament Supreme Courts judges, members of the constitutional courts and other high-ranking courts whose decisions are only subject to further review under extraordinary circumstances Members of Courts of Auditors and central bank board members Ambassadors, chargés d affaires and high-ranking officers in the armed forces Members of publicly owned companies administration, management and controlling organs. 4 Please notice that one cannot provide gambling outside of Denmark with the same licence that allows one to provide gambling in Denmark. This section is therefore only relevant when registering people who are temporarily residing in Denmark. 16

17 If the person has not held a high-ranking office within at least a year, the person will no longer be regarded as a politically exposed person. The examples do not include officials on a medium level or lower. By immediate family members is understood: Spouses. Registered partners. Children. Parents. By close collaborators is understood: People who have ownership over legal entities and legal arrangements or who in some way have close business connections to one of the above-mentioned persons. People who have ownership over a legal entity or a legal arrangement that is established to the advantage of one of the above-mentioned persons. Requirements of particular procedures If the customer is residing abroad, the customer must state the following when registering: Current position. Whether the customer holds or has held a high-ranking public office or whether the customer is related to or has a close collaboration with someone who holds or has held a high-ranking public office. In relation to politically exposed persons the casino must: 1) have adequate procedures to be able to determine whether a politically exposed person is residing in another country, and 2) obtain the approval of the daily management when establishing business connections with these types of customers. By daily management is meant the casino s management or the head of the casino company. If the casino has many customers residing abroad, it might be relevant to subscribe to services from international information providers that are specialised in preparing and updating lists over politically exposed persons. It might also be relevant that the licence holder routinely searches the customer s name on the Internet through a search engine in order to retrieve information about the person. Other information in the casino s possession can also contribute to determine if further examinations must be made into whether the customer is a politically exposed person. The number of customers residing abroad and the character of the countries in which the customers are residing can increase the likelihood of a situation where customers who are politically exposed persons are not on the private provider s lists. From a risk based approach this could lead to the casino having to cooperate with locals on the spot e.g. lawyers, bank connections etc. in order to clarify whether the person is a politically exposed person in the country in question. 17

18 Requirements of information on capital and income sources The casino must install reasonable measures in order to obtain information on politically exposed persons capital and income sources that are covered by the gambling activity. This means that the customer will be asked to present the required information. This information must hereafter be assessed on the basis of circumstances, including the customer s transactions. Enhanced surveillance The casino must continuously be aware of the business connection with a politically exposed person. Enhanced surveillance of the customer connection must be established. 4.3 Storage of identity information etc. The casino must store identity information for at least 5 years after the customer relationship has ceased. See also section 10 on storing of documents and registrations. By identity information is meant actual information about a person. The requirement of storing identity information includes that the casino stores information about which identification documents are being used. This must be seen in relation to the general premise that the casino must be able to document to the Danish Gambling Authority that the identification procedure has been adequate regarding the risk of money laundering and terrorist financing. If the player has shown his passport, the passport number must be noted and stored. When showing a foreign passport, information on birth data (date and place of birth) must be noted and stored if the player does not have a Social Security Number. If a driver s license has been shown, the driver s license number must be noted and stored. Storage after casino activity has ceased If the casino ceases to exist, the latest functioning management must make sure that identity information continues to be stored in accordance with 5, section 3 of the Executive order on online casino. 4.4 Updating of information while the customer relationship is ongoing Documents, data and other information regarding the customer must be updated continuously. The casino must always require that a player identifies himself if suspicion exists as to whether a transaction is connected to money laundering or terrorist financing. The casino must always require new identification if there is doubt as to whether previous information obtained about the player s identity is correct or adequate. If the extent of a player s gambling activity changes substantially, the player must renew the information about the extent of his gambling 5. 5 When changes occur in the extent of gambling compared to the stated information this can cause the changes to be viewed as extraordinary transactions. 18

19 5 Know your customer land-based casino 5.1 Registration of players A casino must register the following information about every incoming guest: - Name - Address - Date of birth - Nationality - Time of arrival The casino must at the same time carry out video registration of the guest. The address must be the player s permanent address (residence). A PO Box does not fulfil the requirement. In case the player is homeless, it can be accepted that the guest is registered even though address information is not available. The player can instead obtain information from the public authorities confirming that the player is homeless. Alternatively, a person from the public authorities can accompany the homeless and confirm the identity of the homeless. If address information is not obtained, the licence holder must be able to explain to the Danish Gambling Authority why it is not necessary. Similar solutions must be found in other cases of impossibility. Storage duty The licence holder must store the registered information for 5 years from the time of the customer s visit after which the information must be deleted. See section 10 on storing of documents and registrations. Video tapings must be stored for 2 months after the customer s visit after which the recording must be deleted. Storage after casino activity has ceased If the casino ceases to exist, the latest functioning management must make sure that the identity information etc. continues to be stored for 5 years. 5.2 Identification of the player When registering, the visitor must show identification that confirms the registered information. By identification is understood documentation proving that the identity information is correct. This can be e.g. a pass port or a driver s licence. That a customer identifies him-self means that the customer gives the required identity information and shows identification. The casino must be certain that the player is who he claims to be. There must not be circumstances that cause doubt as to whether the player is the person presented in the identification documents. The casino should deny the visitor entrance if there is false or insufficient identification. The casino must in every customer relationship be able to document to the Danish Gambling Authority that the extent of the examination (the identification procedure) has been sufficient compared to the risk of money laundering and terrorist financing. 19

20 The casino must on the basis of a risk based approach pose further requirements regarding identification of the player in situations that in themselves carry an increased risk of money laundering or terrorist financing. 5.3 Identification after arrival The casino must always require that a player identifies himself if there is suspicion of a transaction having connections to money laundering or terrorist financing. The casino must also require new identification material if there is doubt as to whether the already obtained information on the player s identity is correct or sufficient. 20

21 6 Awareness duty The overall aim with the awareness duty is to detect possible activities related to money laundering and terrorism. The awareness duty, which is assumed on the basis of objective requirements, supplements the on-going monitoring performed on the basis of the casino s knowledge of the player. When a player s activity, due to its particular character, might be related to money laundering and terrorist financing, the casino s knowledge of the player can be important in relation to whether a suspicion arises in the actual case. The awareness duty is a behavioural norm that the casino and its employees must assume in their daily work with players and player transactions, regardless of whether an actual suspicion exists or not. As a rule of thumb, if it looks suspicious based on existing information and reasonable judgment then there is a need to examine the matter more closely. Situations that could objectively indicate money laundering or terrorist financing demand that the casino company either actually concludes that it is not the case or notifies the State Prosecutor for Serious Economic and International Crime (SEIC). A suspicion will normally arise on the basis of an evaluation of the character of the player activities and any differences compared to normal player activities, concealments and other atypical player circumstances that altogether bring awareness to an eventual attempt of veiling a profit or a terrorist financing purpose. The awareness duty applies regardless whether an actual suspicion of money laundering or terrorist financing exist. The duty applies to all types of players, which is why an actual assessment must always be made. The Money Laundering Secretariat s Indications of eventual money laundering of profit or terrorist financing provides information that can help to identify the elements that can be included in the awareness duty. 6.1 Awareness duty for online casino According to the Executive order on online casino 29, the casino company is bound by a general awareness duty. Management and employees must according to the rules be aware of player activities that, due to their character, might be related to money laundering or terrorist financing. This especially applies to cases of: complex transactions. unusually large transactions. all transaction that are extraordinary compared to the player. 21

22 Transactions that are related to countries or territories where there, according to a FATF declaration, exists a particular risk of money laundering or terrorist financing (the FATFlist) Large transactions A transaction consists of both insertions on a player account, deposits on games, transmissions between the player s own accounts and down payments. The casino itself assesses, according to a risk based approach, if a transaction is deemed large. The casino s general knowledge of the Danish players, their consumption etc. can be used as an assessment element. FATF has set the amount limits at USD/EUR 3,000, but since the limits are not implemented in the Act on Gambling, each casino must set a limit on its own. The limit should be set according to an assessment of what constitutes normal transaction sizes on the account in question. The limits can therefore vary according to different game types. Moreover, the limit should also be set based on a risk assessment of how vulnerable the casino is with regards to money laundering and terrorist financing. The procedures of the casino concerning large transactions should include: Identification of and control with every customer Gathering of appropriate additional information to understand the customer s situation and business. Requirements of the gaming system According to the Danish Gambling Authority s technical standards, the casino s gaming system must give notice or establish a report if a player makes a payment or transaction of for example DKK 20,000 or more (or the equivalent amount in another currency or currencies). The gaming system must also be able to analyse suspicious transactions and from that establish reports to be used in the prevention of money laundering and terrorist financing. Afterwards the reports must be checked in order to examine whether the transactions are suspicious and whether the suspicion cannot be denied. It does not follow from the limit of DKK 20,000 in the technical standards that the individual casino, based on an assessment of the risk elements, cannot or should not have a lower limit. Several transactions that sum up to a large transaction The limit for transactions must be set per customer. This means that if a customer during a day/period altogether exceeds the limit set by the casino, these transactions must be examined. An online casino with several websites should use amount limits per customer and not per website Unusual and complex transactions Unusual transactions can be an unusual degree of movement on the player s account or that an unusually large amount, compared to the player s regular use of the accounts, is deposited. 22

23 Other examples might be: Changing the player-account Players often use their private bank accounts when they play online. The players can have different bank accounts, and they can wish to change which of these account they will use in the casino. The casino should, when changing the bank accounts, consider updating the costumer ID. Identity theft Information on bank accounts can be stolen and unrightfully used on websites. Identity theft can also be used in relation to opening bank accounts which are subsequently used on websites. It is useful for the casino to go through IP-numbers in order to prevent that criminal people on the same computer open several bank accounts based on stolen identities. The casino will be able to see these risks in the data history (charge back system). The player s behaviour Suspicious behaviour can for example be in the form of players who: often play against each other, use different payment methods, do not wish their prizes to be put on the same card used for deposits, carry out huge transactions within a short period of time, deposit funds without playing, or often use prepaid cards. Inquiries Suspicious inquiries from players can concern e.g. questions regarding: down payment of funds to other accounts, especially accounts in countries that appear on the FATF list. down payment to accounts belonging to others The FATF-list Awareness duty (and examination duty cf. chapter 8) in relation to other countries and territories mentioned on the FATF-list means that the casino must be aware of transactions that are connected to these countries. Regarding countries and territories mentioned on the FATF-list, there is seen to be a particular risk of money laundering and terrorist financing. 6.2 Awareness duty for land-based casinos According to the Executive order on land-based casinos 33, the casino management, security personnel and other employees must be aware of the transactions and exchanges which can be related to money laundering and terrorist financing. The awareness duty includes complex or unusually large transactions and all unusual transaction patterns. 23

24 A suspicion will normally arise on the basis of an evaluation of the character of the player activities and the differences that exist compared to normal player activities, concealment and other atypical player circumstances that altogether bring awareness to a possible attempt of veiling a profit or a terrorist financing purpose. Examples of transactions that might be connected to money laundering or terrorist financing are: Large transactions On the basis of a risk based approach the casino itself assesses whether a transaction is deemed large. The casino s general knowledge of the Danish players, their consumption etc. can be used as an assessment element. FATF has set the amount limits at USD/EUR 3,000, but since the limits are not implemented in the Act on gambling, each casino must set a limit on its own. The limit should also be set based on a risk-assessment of how vulnerable the casino is with regards to money laundering and terrorist financing. The procedures of the casino concerning large transactions should include: Identification of and control with every customer Gathering of appropriate additional information to understand the customer s situation and business. The player s behaviour Suspicious behaviour can for example be in the form of players who: place huge amounts in gaming machines, but play for small amounts or not at all, have no intention of playing safeguard by e.g. playing on both black and white on the roulette, often play against each other, have a lot of cash buy chips without playing use different payment methods, carry out huge transactions within a short period of time, or cash in prizes that do not correspond with the actual prizes. Video surveillance In every casino an apparatus must be installed which makes it possible to video monitor all the transactions of the change box and of all transactions made in relation to games played at tables. Casinos that have surveillance departments use videotaping media or similar to maintain registrations of the players activities. These surveillance departments should also include surveillance of potential suspicious transaction reports. For example, the casino can use its surveillance system for the supervision of players who execute transactions that are unusual or suspicious. 24