EU gambling sector in good shape for 5MLD, says LexisNexis

Operators in the gaming and gambling sector are on average 66% of the way through their Fifth Anti-Money Laundering Directive (5MLD) implementation programmes, ahead of all other regulated sectors, according to research conducted by LexisNexis Risk Solutions.

According to research by LexisNexis Risk Solutions, 43% of firms predict a regulatory clampdown on 5MLD is coming soon, meaning businesses need to double their efforts if they are to avoid the repercussions of non- compliance. Firms have already had almost two years to implement controls in line with 5MLD, which came into force in January 2020. The study shows becoming fully compliant requires significant investment for the gaming industry. Operators expect to spend on average £1,016,200 – the highest figure for all regulated sectors, including real estate, banks, lenders, wealth management, accounting and gambling.

On the plus side, there appears to be optimism about the effects of 5MLD, with 61% of firms expecting a net positive impact on their businesses’ ability to detect and prevent crime, once implemented. Of those who are more sceptical, 25% of firms think regulators would do better to channel efforts into championing the use of networked data sources and AI, to help detect patterns of criminal activity. Despite the optimism, firms sent a clear message that they need more support from the regulator, with a significant 83% of compliance professionals asking for better guidance on how to make their AML programmes more effective, and ultimately helping them ensure compliance with 5MLD. Looking ahead, 78% of UK firms expect the gambling sector to be targeted with more regulation as a result of the UK leaving the EU.

Nina Kerkez, director of UK&I Consulting for LexisNexis Risk Solutions said: “The gambling industry’s collective optimism towards regulation is likely due to an already stringent regulatory regime within the sector, comprised most notably of the Gambling Act, LCCP and GDPR. The fact that optimism is undaunted by the high cost of compliance with 5MLD shows that professionals within the gaming sector realise the potential benefits of stronger AML controls.”

“These results speak clearly of the need for regulators to work more collaboratively with industry on AML controls, as well as the need to perhaps review their position on the use of networked data sources and AI to help detect criminal activity. The gambling industry is already highly technology led, so it’s a natural partner with which to explore the benefits of further technology adoption.”

“If anything is going to help us make significant inroads in the fight against financial crime its better collaboration between the regulator, government and the private sector, and wider adoption of data and technology-driven solutions. The ability to effectively and consistently onboard and monitor customers whilst minimising business risk is increasingly becoming a point of competitive advantage for online businesses and although technology adoption carries a high initial investment in time and money, it can pay dividends in the long run – it’s encouraging that this research appears to show that the benefits of technology are already recognised across the industry.”

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