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4th Anti-Money Laundering Directive

A review by the Financial Action Task Force (FATF) culminated in the adoption of a new set of international recommendations against money laundering and terrorist financing in February 2012.

The European Commission undertook a parallel review of the European framework with their public consultation receiving 77 responses, including several from the gambling industry.

On 5 February 2013, the European Commission published the proposal for a Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing. The proposal will require agreement by both the European Parliament and the Council. A full version of the Commission's proposal is available here.

Main modifications affecting the gambling industry:

Broader scope of the Directive beyond "casinos" to cover "providers of gambling services".

Introduction of a requirement for Member States to carry out a risk assessment at national level. The Commission would set the minimum requirements of factors to be taken into consideration.

Member States to decide between enhanced or simplified due diligence (but, no exemptions).

Obligations for providers of gambling services:

Take supporting measures, such as ensuring a proper training of personnel and the establishment of appropriate internal preventive policies and procedures.

Conduct customer due diligence for transactions of 2.000 Euros or more (the Commission proposes application to both stakes and winnings), whether it is carried out in a single operation or in several which appear to be linked.

If the due diligence is conducted at the point of entry, it must be linked to all transactions conducted by the customer in the premise.

Competent authorities are requested to ensure that the owners and persons directing the business are "fit and proper" to do so.

Competent authorities will have enhanced supervisory powers, e.g. to conduct on-site inspections.

Strengthened enforcement of administrative sanctions (Commission intends to propose harmonised criminal penalties).

 

Current Status:

Following the publication of the Commission's proposal in February 2013, the European Parliament decided in September 2013 that the proposal would fall under the joint competence of the Civil Liberties, Justice, and Home Affairs (LIBE) Committee and the Economic and Monetary Affairs (ECON) Committee. The Draft Report of Rapporteurs Sargentini (LIBE) and Karinš (ECON) was published in mid-November, and voted upon in the committees in February 2014. On 11 March 2014, the European Parliament adopted its amendments in Plenary.

The adopted gambling-related amendments include the option for Member States to exempt providers of certain gambling services (except casinos) from national provisions transposing the Directive, on the basis of a low risk posed by the nature of the operations, or a risk assessment. Prior to applying such exemptions, Member States shall seek approval from the European Commission. Customer due diligence measures are required from casinos and online gambling. When winnings of € 2.000 or more are paid out, providers of other gambling services are also required to apply customer due diligence.

With the adoption of the Parliamentary position in plenary, the newly elected MEPs are enabled to build on work done by the previous Parliament, although the new Parliament is not obliged to adopt the position of the pre-elections Parliament.   

The Council has indicated that it is aiming to reach an agreement under the First Reading Procedure with the Parliament during the second half of 2014, under the Italian Presidency. The Council still has not formally adopted its position, but the attaché's of the 28 Permanent Representations are regularly gathering together in Working Group meetings.

 

Related EU Updates
 
MAY 2014
 

European Council - 4th Anti-Money Laundering Directive

Discussions about the 4th AMLD have been taking place in the European Council on a regular basis. On 12 May, the Greek Presidency made its 4th Presidency Compromise publicly available. Through the amendments in this compromise, the Council proposes to give Member States the opportunity to exempt providers of certain gambling services, except for casinos and online gambling (Article 2). A risk assessment should prove the low risk posed by nature, and the scale and operations of the gambling service. Member States would be obliged to notify the Commission, along with the justification based on a proper risk assessment about any exemptions made. Furthermore, providers of gambling services would be bound to customer due diligence (Article 10) through either a collection of winnings or a stake, when carrying out transactions amounting to € 2.000 or more (whether that transaction is carried out in single transaction, or in several that appear to be linked).

Following the Working Group meeting on 16 May, these above mentioned amendments were supposedly not subject to any amendments. The Presidency Compromise will now be shared with the Permanent Representatives in the COREPER and might be officially approved on 28 May. Thereby the text would become an official General Approach.

Following the presentation of a General Approach, the European Council and the European Parliament are expected to engage in so-called trialogue meetings in October 2014, aiming to reach an agreement on the text before the end of 2014. The European Commission is expected to publish its views of the Parliamentary vote anytime soon. They disagree with the approaches taken by the Parliament and Council with regards to gambling, as the Commission believes no exemptions should be provided.

 
APRIL 2014
 

European Parliament aims at starting a Second Reading Procedure on the 4th AMLD

As described in our last update, the European Parliament adopted its position with regards to the 4th Anti-Money Laundering Directive (4th AMLD) during the March plenary session. Considering the lack of time ahead of the elections to agree on a First Reading Agreement with the Council, the Parliament decided that it did not want to engage in negotiations with the Council and aimed at starting a Second Reading Proceedure.

The Council has however indicated that it is still aiming to reach an agreement under the First Reading Procedure during the second half of 2014, under the Italian Presidency. The Council still has not formally adopted its position, but the attaché’s of the 28 Permanent Representations are regularly gathering together in Working Group meetings.


European Parliament votes on 4th AMLD 

In the March plenary session, the European Parliament debated and voted upon the 4th Anti-Money Laundering Directive (4th AMLD) in plenary in Strasbourg. With regards to gambling, the Commission said that it preferred not to allow any exemptions as they might be interpreted too widely, or be misused. During the debate, several MEPs of the Socio-democratic political group (S&D) expressed their support for the Commission's views. On the other hand, MEP Sampo Terho (EFD, FI) mentioned that the Directive could have the potential to hamper legal activities for instance in Finland, where the state-owned gambling industry should not be subject to the Directive.

In the end, all the gambling-related amendments that were adopted during the LIBE/ECON vote in February were adopted by a large majority of all MEPs in the Parliament. To recall, the adopted amendments include the option for Member States to exempt providers of certain gambling services (except casinos) from national provisions transposing the Directive, on the basis of a low risk posed by the nature of the operations, or a risk assessment. Prior to applying such exemptions, Member States shall seek approval from the European Commission. Customer due diligence measures are required from casinos and online gambling. When winnings of €2.000 or more are paid out, providers of other gambling services are also required to apply customer due diligence.



 
MARCH 2014
 

Revised 3rd Presidency Compromise on the 4th AMLD

In the European Council, a revised version of the 3rd Presidency Compromise on the 4th AMLD Laundering was published on 21 February. It proposes a similar amendment to the scope of the Directive as the Parliament, and allows Member States to exempt certain gambling services from national provisions transposing the Directive, except for casinos and online gambling. The Compromise also elaborates and states that if the Commission considers an exemption to be unjustified, it shall within a three month period ask the Member State to refrain from granting the exemption. If the Commission however
does not issue this response within three months, the exemption may be granted. The Presidency Compromise is an unofficial position and will be subject to change. The Greek Presidency is planning to present its official General Approach in Q2 this year.


LIBE and ECON Committees vote on the 4th AMLD

The vote on the 4th AMLD in the LIBE/ECON committees took place on February 20. The adopted amendments related to gambling include the option for Member States to exempt providers of certain gambling services (except casinos) from national provisions transposing the Directive on the basis of a low risk posed by the nature of the operations, or a risk assessment. Prior to applying such exemptions, Member States shall seek  approval from the European Commission. Customer due diligence measures are required from casinos and online gambling. When winnings of € 2.000 or more are paid out, providers of other gambling services are also required to apply customer due diligence. Indicative date for the plenary adoption of the Parliamentary amendments is 12 March.

 
FEBRUARY 2014
 

"Shadow meetings" take place in the European Parliament to discuss the 4th AMLD

So-called ‘shadow meetings' between rapporteurs and shadow rapporteurs have been taking place in the European Parliament to discuss compromise amendments regarding the 4th Anti-Money Laundering Directive (4th AMLD). As rapporteurs and shadow-rapporteurs have been unable to reach agreements in the amendments, voting on the 4th AMLD in the committees on Economic and Monetary Affairs (ECON) and on Civil Liberties, Justice and Home Affairs (LIBE), initially scheduled for the end of January, has been postponed to 13 February and might be delayed even more. The vote in plenary is currently still set for 2 April.

 
JANUARY 2014
 

Consideration of amendments on the 4th AMLD in the LIBE/ECON Committees

In the first week of January, the consideration of the amendments filed by MEPs regarding the 4th Anti-Money Laundering Directive took place in the LIBE/ECON committees. ECON Rapporteur Krišjānis Kariņš (EPP, LV) opened the discussions by noting that the scope of the Directive should be narrowed as Member States themselves should decide how to deal with the gambling industry. ECON shadow-rapporteur Peter Simon (S&D, DE) agreed with this, but LIBE shadow-rapporteur Emine Bozkurt (S&D, NL) argued that a common EU approach is necessary in this area and thus the decision on how to apply the 4th AMLD should not be left up to the Member States. Finally, LIBE shadow-rapporteur Sir Graham Watson noted that the Commission's approach is too harsh on gambling. He made a differentiation between high and low risk types of gambling and not all products should be fully covered by the Directive.

 
DECEMBER 2013
 

European Council discussions on the 4th AMLD

In the Council, several meetings have taken place amongst attachés in the Working Party on Financial Services and, in late November, the Economic and Social Affairs Ministers (ECOFIN) met to discuss the Directive. A General Approach has however, not been presented by the Lithuanian Presidency and discussions will continue in 2014 under the Greek Presidency.


LIBE and ECON Committees publish amendments on the 4th AMLD

On 9 December, the amendments filed by the Committees on Economic and Monetary Affairs (ECON) and Civil Liberties, Justice and Home Affairs (LIBE) to the 4th Anti-Money Laundering Directive were published. In the philosophical outline of the proposal, many MEPs have made amendments to emphasize the necessity to differentiate between different types of gambling, since some types bear a high risk of being used for money-laundering, while other types bear less risk. In a follow-up to this outline, Member States are allowed to exclude certain types of gambling services from the Directive, with the exception of casinos and online gambling. MEPs have filed different amendments with regards to the due diligence measures that Member States need to ensure, some of them excluding certain types of gambling services and others raising the threshold to € 3.000. The amendments will be considered on Thursday 9 January and voted upon on 23 January. Following adoption, a vote in plenary might take place in March, where the adopted Opinions of the Legal Affairs (JURI) and Development (DEVE) committees might be considered as well.

Link to the amendments filed in the LIBE/ECON committees


LIBE and ECON Committees publish Draft Report on the 4th AMLD

The LIBE/ECON committee has published its Draft Report. Similar to the amendment made by Rapporteur Bill Newton Dunn in the Development Committee for Opinion, the paragraph in the Commission's proposal stating that ‘Providers of gambling services with physical premises (e.g. casinos and gaming houses) should ensure that customer due diligence can be linked to the transactions conducted by the customer on those premises', is amended. In the Draft Report, the explicit mentioning of ‘physical premises (e.g. casinos and gaming houses)', is deleted from the proposal. The deadline for amendments was Thursday 5 December, and on 9 January the amendments to this Draft Report will be discussed.

Link to Draft Report of Rapporteurs KrišjānisKariĦš (ECON) and JudithSargentini (LIBE)

 
NOVEMBER 2013
 

The publication of the Draft Report on the 4th Anti-Money Laundering (AML) Directive has further been delayed by the MEP's in the Civil Liberties, Justice and Home Affairs (LIBE) and Economic and Monetary Affairs (ECON) committees. The committees plan to present their shared Draft Report at the end of November, which will be followed by a deadline for amendments in early December and a consideration of those amendments in early January. Following the possible adoption of the report at the end of January, a mandate will be given to the LIBE and ECON rapporteurs to start trilogue discussions with the Council and agree on a so-called First Reading Agreement.  The final vote on the First Reading Agreement between Council and Parliament is planned for the plenary week in Strasbourg of 10 - 13 March.

Following the delay in votes in the responsible committees, the final vote for the adoption of the Draft Opinion of the Legal Affairs (JURI) committee has also been postponed to late November.

Contact the Secretariat for further information

 
OCTOBER 2013
 

JURI Committee amendments to the 4th Anti-Money Laundering Directive

The Legal Affairs (JURI) Committee published its amendments on the Anti-Money Laundering Directive on October 9. To recall, Rapporteur Antonio López-Istúriz White (EPP, ES) expressed in his Draft Opinion of September, that that supervision should be extended to cover gambling services in general and not only casinos, without giving a homogenous treatment to all gambling categories. In the amendments, MEPs Bill Newton Dunn (ALDE, UK and Rapporteur in the Development Committee) and MEP Rebecca Taylor (ALDE, UK) amend the text in a way that it applies to casinos, online gambling and ‘other providers of gambling services which carry a high risk of being used for money laundering'. MEP Antonio Masip Hidalgo (S&D, ES) amends the text in a way that the 4th AML would apply to casinos, to online gambling when a business relationship is established and ‘for other providers of gambling services, regarding the payment of prized amounting to € 2 000 or more'. Finally, Italian EPP Member Giuseppe Gargani amends the text in a way that it applies  to all types of games, adding bingo and games of chance and those marketed through social networks. He wants to mitigate the risks of mafia infiltration and money laundering and ensure that gambling service providers have a level playing field. On 5 November, both the Draft Opinion and additional amendments will be voted upon.

Link to the JURI Committee Amendments

Link to the Draft Opinion of JURI Rapporteur Antonio López-Istúriz White

 
SEPTEMBER 2013
 

4th Anti-Money Laundering Directive

On 12 September the Conference of Presidents decided that the competences on the 4th Anti-Money Laundering Directive (AML) will be entirely shared between the committee of Civil Liberties, Justice and Home Affairs (LIBE) and the Economic and Monetary Affairs (ECON) committee (Rule 51 of the Rules of Procedure). From now on there will be shared meetings and the two committees will deliberate jointly about the AML report. A provisional timeline with regard to the new Report has been included into the attachments of this Bulletin.

On 17 September, the Committee on Legal Affairs (JURI) met to discuss the AML proposal. Rapporteur for the Opinion, MEP López-Istúriz White reaffirmed his position that supervision should be extended to cover gambling services in general and not only casinos, without giving a homogenous treatment to all gambling categories. The Development (DEVE) committee adopted its Opinion on 30 September. Rapporteur Newton Dunn expressed at the end of August that the gambling sector does not fall under the responsibilities of the committee and that no amendments would be filed with regard to gambling. Nonetheless, the paragraph in the Commission's proposal that states that ‘Providers of gambling services with physical premises (e.g. casinos and gaming houses) should ensure that customer due diligence can be linked to the transactions conducted by the customer on those premises', was amended by Mr. Newton Dunn. In his final Opinion the explicit mentioning of ‘physical premises (e.g. casinos and gaming houses)', is deleted from the proposal.

Link to MEP López-Istúriz White's Draft Opinion

Link to MEP Newton Dunn's Draft Opinion (final version not yet available)

 

 
AUGUST 2013
 

4th Anti-Money Laundering Directive

The Parliament's Committee and Economic Affairs (ECON) has published its amendments to the Commission proposal. MEP Torvalds (FI, ALDE) has tabled an amendment calling for Member States to be allowed to ‘exclude certain types of gambling services where the risk of money laundering or terrorist financing is minimal due to low stakes and the ways by which the gambling services are provided'. Similar amendments have been tabled by MEPs from the Socialists & Democrats (Peter Simon, DE) and the European People's Party (Sari Essayah, FI and Sirpa Pietikäined, FI). Other amendments call on the threshold for due diligence requirements to be raised from € 2,000 to € 3,000. The amendments will be discussed in the ECON committee on 16 September, after which the Draft Opinion is scheduled to be adopted on 14 October. In early September however, the Parliament's Conference of Presidents still has to decide whether ECON will have a shared lead with the LIBE committee, in which case the amendments could become part of a Report and not an Opinion.

 

Link to ECON Committee's Amendments

 
JULY 2013
 

ECON Committee's Exchange of Views on the AML Directive

The Committee on Economic and Monetary Affairs (ECON) held an exchange of views on 9 July on the Commission's proposal for a Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (AML). ECON is one of three committees currently reading the proposal.  Rapporteur Krišjanis Kariņš (LV, EPP) reiterated his wish not to excessively harm a specific gambling sector through overbearing regulations; nevertheless he did say that adequate safeguards against money-laundering should be introduced across all gambling sectors. In the same vein shadow rapporteur Peter Simon (S&D, DE) used the example of the German lottery to argue why not all forms of gambling are applicable in terms of money-laundering activities. A Commission representative at the meeting restated that the Commission proposal takes a flexible approach towards gambling, acknowledging that there are different money-laundering risks across the sector. EUROMAT is currently in the process of outreaching to all Rapporteurs and Shadow Rapporteurs on this, now that it has become apparent that the European Parliament may be open to narrowing the scope.

 
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