GamblingCompliance: Germany Moves To Exclude Slots From AML Checks

By Elisa Grabbe, published at www.gamblingcompliance.com

Slot halls, lotteries and on-course tote betting will be exempt from strict new anti-money laundering (AML) requirements, according to a bill published in Germany last week.

The bill will transpose the European 4th Anti-Money Laundering Directive (4th AMLD) into German law and has been published following a consultation with stakeholders last December.

Slot machines, lotteries and some horseracing products are excluded from the scope, and the bill also includes specific provisions applicable to online gambling operators.

According to the bill, slot machines are considered to present “very low money laundering risk” due to strict legal requirements in place which limit stakes and winnings.

EU member states are allowed to exempt certain gambling sectors following an assessment of inherent money laundering risks.

The risk assessment carried out by the German government takes into account that under existing legislation, slot machine stakes are limited to €0.20 and winnings must not exceed €2 per game and €400 per hour. In addition, card payments are prohibited and deposits are capped at €10.

Land-based horse race betting organised by local horseracing associations are viewed as low risk because of their typically low stakes and the limited number of races organised per year.

Still, land-based betting shops will have to comply with the AML legislation, even when they are offering betting on the same horse races.

Jessica Maier, an attorney at Melchers law firm in Germany, told GamblingCompliance: “These changes seem inconsistent in light of the requirements of the 4th AMLD and call into question whether Germany has sufficiently performed the necessary risk analysis.”

Maier, who has been following the progress of the amendments closely, added: “Betting shops, which according to the draft are not to benefit from an exemption, can be expected to use this as a basis for debate in further lobbying efforts.”

State lotteries and charity lotteries are also excluded from the scope of the AML bill.

Last month, a spokesperson for the European Commission confirmed that lotteries and slot machines were expected to be exempt from German AML requirements.

In line with the EU directive, the German draft sets a general threshold for customer due diligence at €2,000 in stakes placed or in winnings collected.

Casinos and other land-based operators may comply by checking players’ identity as they enter the establishment, as long as they ensure that transactions over the threshold, including exchange of tokens, can be traced back to the respective player.

The €2,000 threshold does not apply to online gambling operations. Instead, operators always have to identify players and notify the authorities without delay when a player opens or closes an account.

Online operators that do not have a physical presence in Germany should report suspicious transactions to authorities in the member state where they are based, according to Wulf Hambach, founding partner at Hambach & Hambach in Munich.

“Operators offering online gambling who are based and licensed in another EU member state must comply with the AML legislation in their country of origin, based on the country of origin principle,” said Hambach.

Operators will also be required to appoint a money laundering reporting officer. According to an earlier draft, the officer had to be based in Germany. This restrictive location requirement has now been dropped but it remains uncertain whether operators could potentially outsource AML functions.

Although AML oversight for most sectors has shifted from the Federal Criminal Police Office to the Ministry of Finance, state gambling authorities are understood to retain responsibility for AML supervision in the sector.

The draft is now pending with the Federal Council, the representation of Germany’s 16 states, which will confirm its position on the bill before it is introduced in the German parliament.

France, Austria, Slovenia and the Czech Republic have already transposed the 4th AMLD. Other countries such as Italy, Sweden, Finland and Denmark have submitted draft legislation to their national parliaments, while a number of member states are still carrying out preparatory works or consultations.

For further information please check www.gamblingcompliance.com