Prevention of money laundering and terrorist financing in gambling

Gambling is an economic activity and consequently also one potential area that can be used for money laundering and terrorist financing.

Money laundering refers to activities where the aim is to conceal the source of the proceeds of criminal activity and to make them appear legitimate. Terrorist financing is the provision, acquisition or collection of funds from legal or illegal origins for terrorist purposes.

The Act on Preventing Money Laundering and Terrorist Financing (444/2017) has a broad scope of application. It applies to licensed gambling operators in mainland Finland and their agents, i.e. the businesses and entities that broker their gambling services.

Under the Money Laundering Act, gambling service providers and their agents are obliged, subject to certain conditions, to:

• identify their customers
• verify their customers’ identity
• monitor any unusual patterns of transactions in their operations
• submit money laundering reports on suspicious transactions to the Financial Intelligence Unit of the National Bureau of Investigation.

Gambling service providers must also draw up a risk assessment to identify and assess the risks of money laundering and terrorist financing.

The National Police Board supervises gambling service providers and their agents to ensure compliance with the Money Laundering Act. In practice, the Gambling Administration at the National Police Board carries out the supervisory duties.

Under the Money Laundering Act, the National Police Board must ensure that gambling service providers fulfil their obligations under the Act and take all the necessary measures. The National Police Board is also obliged to report to the Financial Intelligence Unit any suspicious transactions uncovered in connection with supervision or other duties it performs, or if it suspects terrorist financing. However, the investigation of suspected offenses is the responsibility of the police.

What is a supervisor-specific risk assessment under the Money Laundering Act and why has one been published?

The National Police Board has published an assessment of the risks of money laundering and terrorist financing in gambling operations in mainland Finland.

The risk assessment is the supervisory authority's view of the threats and events affecting gambling activities with regard to money laundering and terrorist financing.

The risk assessment has identified the most likely and significant money laundering risks to gambling and presents ways to reduce them.
The risk assessment enables the prevention of money laundering and terrorist financing to be targeted, inter alia, at those services and products for which the risks have been identified as being the most significant. In supervisory activities, such targeting of supervision is referred to as risk-based supervision.

A risk assessment also serves as a tool for gambling service providers to determine whether their gambling activities take into consideration all the risks outlined in the supervisory authority's risk assessment and how the risks and management measures are evaluated by the supervisor.

The risk assessment consists of two sections, a general section and a summary. The general section of the risk assessment presents the purpose and objective of the assessment and outlines the specific features of gambling in mainland Finland. In addition, the document defines the sources used in the evaluation as well as the method used. The summary highlights the most significant risks identified in the risk assessment.

Prevention of money laundering and terrorist financing in agent activities

Traders who can identify risks related to money laundering and terrorist financing in their own operations or who can be assumed to be exploited for these purposes are in a key position in the fight against money laundering.

Due to their central role, the agents have a good chance of detecting unusual customer behavior or deviant gambling. The Money Laundering Act also directly obliges agents to identify the customer and to report suspicious transactions. Therefore, agents play an essential role in the fight against money laundering.

What should agents do pursuant to the Money Laundering Act?

As an agent or a representative of an agent, you must always identify the customer and verify the identity of the customer if:

• the customer spends at least 2,000 euros on gambling 
• the customer redeems at least 2,000 euros in profits
• you suspect the occurrence of suspicious business activity in the situation, or you suspect that the funds included in the business transaction are used for financing of terrorism or an attempt to do so, which is a punishable offence

The pecuniary amounts mentioned above may consist of one payment or several interlinked payments, totaling at least 2,000 euros.

The obligation to identify the customer is absolute and there are no exceptions. Thus, for example, even a previously known customer must be identified and their identity must always be verified in the situations mentioned above.

As an agent, you have an obligation to make a suspicious transaction report if: 

• you detect suspicious business activity
• you suspect financing of terrorism.

Suspicious business activity means a transaction that deviates from the customer's usual activity or is atypical for the activity. Therefore, what is atypical depends on the customer or the situation. If you detect an unusual transaction, find out the reason for the transaction. If the transaction appears suspicious even after the clarification received, or if you do not receive any clarification, report the incident immediately to the Money Laundering Clearing House of Finland. As an agent, you can also submit a report via a gambling service provider.

Suspicious transactions must always be refused. Remember to submit a report also if a fact that makes the transaction suspicious is subsequently discovered. The report of suspicious transaction must therefore be made, regardless of whether the transaction has been executed, suspended or refused.

However, it is important that you do not disclose the making of the report or the investigation to the person who is the subject of the report or to any other person.