Amcaoglu indicated that the government plans to grant 32 new casino permits. He described the move as a “great opportunity for the country’s economy,” comparing it to the approach taken in northern Malta. Currently, the country is home to 32 casinos, and the new law will potentially increase that number to over 60.

North Cyprus, officially known as the Turkish Republic of Northern Cyprus, is a country recognised only by Turkey. It lies in the northern part of the island of Cyprus, and a buffer zone separates it from the Republic of Cyprus.

New Law Promises a Boom, Critics See Rise in Gambling Addiction

The North Cyprus government voted to relax casino laws on June 3. The changes include removing previous caps on the number of casino licenses.

It also removes a distance requirement for casinos to be built away from town centers, while reducing that distance to 100 meters from schools.

Other changes include downgrading the ban on Turkish Cypriots entering casinos to a civil offence, punishable by a fine of up to €50. Also, the new law raises the minimum hotel bed requirement from 500 to 750.

Proponents of the new law project a significant boost in tourism employment through the growth of hotels, services, and related industries.

The changes have also raised numerous questions among opponents. While they share the view of an economic boost, the opposition says more casinos would mean a rise in problem gambling and addiction.

Those against the changes pointed to two provisions in particular. Reducing the fine for Turkish Cypriots would drive more people to casinos, which will increase addiction. Also, putting a casino within 100 meters of a school exposes minors to gambling.

Furthermore, opponents argue that as an unrecognized country, North Cyprus could become a hub for money laundering.

Republic of Cyprus: A Contrasting Model

While the North is unrecognized, the Republic of Cyprus (commonly referred to as Cyprus) is a member of the European Union and adheres to the bloc’s strict laws and regulations.

Cyprus has taken a significantly different approach to land-based casinos compared to the North, when it legalized the sector in 2015.

Under Law 124(I)/2015, the country established a tightly regulated monopoly model with one exclusive license for a main resort and casino, plus up to four smaller, supporting satellite casinos. The law also established the Cyprus Gaming and Casino Supervision Commission to oversee the regulation of casino gambling.

The City of Dreams Mediterranean resort in Limassol opened in July 2023 following a €600 million ($686 million) investment. Officials projected about 6,500 additional jobs and an influx of 300,000 extra visitors.

The property’s parent company, Melco Resorts and Entertainment, also operates the satellite locations. It first opened a casino in Nicosia in 2018, followed by casinos in Larnaca, Ayia Napa, and Paphos. The Larnaca location closed during COVID-19 and never reopened.

Regarding online gambling, Cyprus allows only sports betting, with no online casinos. OPAP is the exclusive license holder for retail sports betting and lotteries. It is also one of several licensed Class B online sports betting operators.

AML/CFT Challenges in the North

North Cyprus heavily relies on its regulated retail casino industry. However, regulation of the rest of the gambling market in the unrecognized country is minimal.

While retail sports betting locations must hold a Müşterek Bahis license, many gray-area shops exist. These include unreported satellite branches and venues that operate as “VIP” rooms within hotels or through front-company arrangements. Information is scarce, but estimates are that there are around 50 licensed locations and around 70 unregulated ones.

Meanwhile, no law in North Cyprus regulates online gambling. As a result, offshore platforms have flooded the market, including some operated by organized crime groups.

One high-profile case shed light on the problem. In 2022, the murder of Halil Falyali, a prominent Turkish Cypriot businessman, exposed his $80 million-per-year illegal online betting empire. He allegedly funneled $15 million to public officials in Turkey and Northern Cyprus.

Northern Cyprus is not part of the European Union (EU) or a FATF-supervised jurisdiction. That means the gambling industry, including regulated land-based casinos, is not subject to EU-standard anti-money laundering (AML) or countering the financing of terrorism (CFT) inspections.

That opens the doors for dirty money (as in the Falyali case) to flood the market.

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Following an AML compliance inspection of the operator, the orders were administered to Mr Green by the authority on April 10 for AML breaches on risk assessment, on procedures for internal controls and for failing to ensure that controls are carried out.

In addition, the reprimand was handed to the operator for breaching the rules on notification in the AML act.

Regarding insufficient risk assessment, Spillemyndigheden stated that the decision was made as “no separate risk assessment has been made of the individual identified risks associated with Mr Green’s business model, including payment solutions, and the risk factors associated with it”.

The authority noted that section 7(1) of the AML act states that undertakings subject to the act must “identify and assess the risk that the undertaking may be misused for money laundering or terrorist financing”.

The risk assessment must feature a “separate assessment of the risk of the individual payment solutions and delivery channels, as well as a separate risk assessment of the risk factors associated with these”, to which Spillemyndigheden said the operator did not comply.

Regarding insufficient and lack of business procedures, Spillemyndigheden claimed that Mr Green doesn’t have “adequate procedures for internal controls, as these do not describe the interval at which controls should be performed”, as well as no “written procedures on how to monitor that controls are carried out”.

The authority remarked that section 8(1) of the AML act states that undertakings subject to the act must have “adequate written business procedures, which must include internal control”.

In addition, business procedures should describe how listed areas are handled, and internal control also means that “there must be controls of whether the controls are being carried out” as well as being checked. 

Spillemyndigheden asserted that the operator “has not sufficiently complied with the commitments on business procedures for controls”.

Regarding lack of documentation of controls, Spillemyndigheden declared that Mr Green hasn’t “documented that controls have been carried out to verify that the internal controls have been performed”. 

The authority commented that under the same section 8(1) of the AML act, undertakings subject to the act must “document the controls that have been carried out”, which it says Mr Green has not complied with the obligations to “perform controls to ensure that the internal controls are performed”.

Regarding the reprimand for not making an immediate notification, Spillemyndigheden noted that it was given to Mr Green as the operator, in two cases, did not comply with the requirement of immediately notifying the Money Laundering Secretariat. 

The authority commented that section 26(1) of the AML act states that an undertaking “must immediately notify the Money Laundering Secretariat if the undertaking knows, suspects or has reasonable grounds to suspect that a transaction, funds or activity is or has been related to money laundering or terrorist financing”, a demand which it says Mr Green didn’t comply with.

Spillemyndigheden has instructed Mr Gren to submit a revised risk assessment by June 10, 2024, as well as a revised business procedure for internal controls and prepared business procedures for how the implementation of controls is monitored.

In addition, the operator must also submit documentation that it has been controlled and that the “controls have been carried out” to the authority by October 10, 2024.

The authority added that “the reprimand does not entail any obligation to act on the part of Mr Green Limited as the breach no longer exists”.

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The KSA has stated that this will be the first update to the AML guidelines since the KOA came into force in April 2021, and the update is based on its research, signals from consumers and suggestions/questions from licence holders.

Part of the authority’s research into updated AML guidelines included opinions of gambling stakeholders such as DNB, the Dutch Financial Intelligence Unit, law firms, providers and industry associations. 

The KSA noted that, amongst other points, its consultation revealed that “research obligations in the context of the prevention of gambling addiction and Wwft client research were sometimes too intertwined”.

Addressing the issues found and applying to both online and land-based operators, customer transactions must be monitored and any unusual activity must be reported to the FIU.

The gambling authority has stated that its documents offer tools to providers to help them comply with the Wwft, and the amendments include a “step-by-step plan for investigating the source of a player’s resources, including examples”.

Earlier in December, René Jansen, Chair of KSA, highlighted the changes that are occurring within Dutch online gambling, noting that it demonstrates the market is reaching a “certain degree of maturity”.

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The regulatory action follows an investigation by the UKGC into Lindar Media, which found failings in the operator’s processes aimed at preventing money laundering and protecting individuals from being harmed or exploited by gambling.

The commission found failings in Lindar Media’s implementation of AML policies, procedures and controls, deficiencies in its responsible gambling policies, procedures, controls and practices, and weaknesses in its reporting arrangements in respect of key events.

According to the UKGC, Lindar Media had failed to have an appropriate money laundering and terrorist financing risk assessment, as it had not adequately assessed risks relating to customers, means of payment, additional inherent risks and emerging risks operator control.

The operator also didn’t specifically address certain key risk factors as set out in the Money Laundering Regulations 2017 and the commission’s Prevention of Money Laundering and Combating the Financing of Terrorism February 2021.

The UKGC also said it was inappropriate for Lindar Media to have procedures in place which automatically assigned all customers with a low money laundering risk rating. 

In addition, the operator had low enough financial thresholds that allowed a customer to deposit and lose £10,000, a figure which did not appear to be sufficiently risk-based. Some customers were also not prevented from depositing and losing £10,000 in a short period. 

The commission added that Lindar Media has taken proactive steps to address this and the issue has now been rectified.

The operator was also deemed to have failed to advertise its marketing material in a socially responsible manner, as well as make an annual financial contribution to an organisation which supports research, prevention and treatment for those harmed by gambling.

It was also discovered by the UKGC that the person at Lindar Media responsible for the licensee’s gambling regulatory compliance function (Head of Regulatory Compliance) occupied other management posts without the commission’s approval.

As a result of the UKGC investigation, Lindar Media will pay £690,947 as part of a settlement with the commission, with all £690,947 going to socially responsible causes.

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Received following an investigation from the UKGC, the operator, which runs spreadex.com, was said to have financial alerts that were “ineffective” and allowed customers to “lose significant amounts” over a short period of time. 

This was said to place an “overreliance” on financial alerts to identify customers at potential risk of experiencing harm and not sufficiently recording and evaluating its customer interaction.  

Leanne Oxley, Gambling Commission’s Director of Enforcement and Intelligence, stated: “Whilst it is disappointing to see anti-money laundering and social responsibility breaches occur despite our extensive published cases highlighting similar failures, we note the swift and robust action the licensee took to bring itself back to compliance. 

“We expect similar commitment and engagement across the gambling sector.”

Another example of social responsibility failures stated one customer was able to deposit £1.7m and lose £500,000 during the course of a one month period. 

The UKGC noted that customer interactions had taken place, however, it was said to “not been sufficiently evaluated” and did not include considering the effectiveness of restricting the account. 

In relation to the AML failures, the UKGC’s investigation revealed that a customer, who met a £25,000 financial deposit alert had said alert for further review increased to £100,000 based on a self-declaration of income and an open-source check. 

Another case highlighted that a customer was able to deposit £365,000 and lose £284,000 over a period of three months without source of funds being sufficiently established. 

Additionally, another customer was said to be able to continue depositing after providing redacted bank statements in response to a request for evidence of source of funds. 

Spreadex has stated that the penalty payments will go towards socially responsible causes as part of a settlement with the UKGC. 

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The European Union’s anti-money laundering rules are set to be updated and reinforced after the European Commission published proposals for two AML regulations and a revision of the current EU AML Directive. 

The Commission’s proposals follow concern and criticism in recent years that some EU member states have not sufficiently implemented and enforced the EU’s current AML rulebook. 

Dr. Ekaterina Alexandrova Hartmann, director of legal and regulatory affairs at the European Gaming and Betting Association, noted: “We welcome the efforts of the European Commission to continuously improve the EU framework for combating money-laundering. 

“EGBA members already apply the highest regulatory standards in AML compliance and are fully committed to tackling money laundering in the online gambling sector. To support this, we are working closely with our members to develop EU-wide, sector-specific guidelines to help Europe’s online gambling companies comply with the increasingly complex AML rules in the EU.”

The proposed regulations, whilst aimed at financial services, are expected to impact Europe’s online gambling sector, including rules on beneficial ownership, customer due diligence and the establishment of new EU AML authority. 

The legislative package will now go through the EU legislative process and will be sent to the European Parliament and Council for discussion and ultimately approval, which might take upwards of 18 months. 

Once approved, the regulations will immediately enter into force in all EU member states, and the Directive will need to be transposed into national regulation by EU member states.

EGBA will analyse the future implications of the proposed changes for the AML compliance requirements of Europe’s online gambling sector. To ensure the best possible application of the EU’s AML rulebook, EGBA is preparing a set of sector-specific guidelines for Europe’s online gambling companies. The guidelines will be published later in 2021.

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Including countries such as Albania, Myanmar, Syria and Zimbabwe, Malta previously faced international criticism regarding the Panama Paper scandal, which saw Maltese government figures implicated in establishing offshore companies encounter little legal action, as well as controversy surrounding the sale of national passports. 

Speaking at a press conference, President of Malta, Robert Abela, commented on the FATF’s decision: “While I consider this decision unjust, we will continue the reform process because we are acting with conviction and believe in good governance.

“We remain committed to making whatever reforms are needed while preserving the national interest. We will never be uncooperative or obstructive but will intensify our resolve to fight money laundering and the financing of international terrorism.”

Joining Aela in criticising the Financial Action Task Force decision, opposition leader Bernard Grech described the move as a ‘national punishment’, whilst both the government and the Malta Gaming Authority continue to defend the island’s financial security policies and infrastructure, highlighting that Maltese authorities are capable of countering illegal betting in cooperation with sporting bodies and law enforcement. 

Both the government and financial figures  have good reason to be concerned by the FATF’s ruling, as the gambling sector and financial services play a key role in the country’s economy, and so a decision deeming the island’s infrastructure to be monetarily unsound could have severe impacts. 

Gambling, in particular, plays a key role in the nation’s economic structure, supporting over 9,000 jobs both directly and indirectly, generating €700m annually and accounting for 12 per cent of national GDP.

The announcement closely follows last week’s revelation that Malta could have to withdraw its veto of the signing of the Macolin Convention, a Council of Europe sports safeguarding and anti-corruption initiative, in order to pass the FATF’s financial safety Moneyval test.

If fully ratified, the convention would prevent licenced gaming operators in Malta from extending commercial operations overseas unless following the laws of the other member states, as part of a wider international restriction of the betting industry.

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Through an official statement, the AXL-listed company stated it has been informed that Austrac’s Regulatory Operations branch has ‘identified potential non-compliance’ by Crown Melbourne Limited with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and the Anti-Money Laundering and Counter-Terrorism Financing Rules 2007.

The statement reads: “The potential non-compliance includes concerns in relation to ongoing customer due diligence, and adopting, maintaining and complying with an anti-money laundering/counter-terrorism financing program.

“These concerns were identified in the course of a compliance assessment that commenced in September 2019 and focussed on Crown Melbourne’s management of customers identified as high risk and politically exposed persons.”

If the alleged breaches are proven, it could result in Crown Resorts, who have casinos in Melbourne and Perth and are in the process of building another in Sydney, being handed a six digit figure in fines and facing the potential loss of its casino licenses.  

Investors in Crown Resorts have reportedly wiped $500m from the company’s value after the financial crimes watchdog said it was formally investigating the group, with shares falling by 8.2 per cent to $8.25 hitting its lowest closing level in six months, amid growing signs of investor discontent about the company’s operations and governance.

The statement concluded: “The matter has been referred to Austrac’s Enforcement Team, which has initiated a formal enforcement investigation into the compliance of Crown Melbourne.”

Crown Melbourne has confirmed it will respond to all information requests to support the investigation and will fully cooperate with Austrac throughout the process.

In August, Crown Resorts issued a lengthy notice on behalf of its board of directors as the organisation took out a full length newspaper advertisement in its home country where it slammed media allegations.

The letter, titled ‘Setting the record straight in the face of a deceitful campaign against Crown’, addressed differing aspects of the allegation under the headings of junket operators, anti-money laundering, detentions in China in 2016 and visa processing, with Crown stating that there’s several examples ‘of poor or misleading journalism’.

Earlier in the year, Crown Resorts issued a staunch defence of its operations following increased scrutiny and criticism due to allegations made by Australian media regarding money laundering and the fast-tracking of visas for wealthy overseas gamblers.

Following an investigation by the country’s Nine Network, the results claimed that the company used junket operators, allegedly linked to drug traffickers, as it tried to attract wealthy Chinese gamblers to Australia.

The investigation also suggested officials aided high spenders through the immigration process and claimed at least one Asian crime syndicate laundered money through the organisation’s casinos.

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The regulator said that in one instance, the operator failed to carry out source of funds checks on a ‘VIP’ customer who deposited over £8m and lost over £4m during a four-year period. In another, Betway failed to carry out effective social responsibility interactions with a customer who deposited and lost £187,000 in two days.

Betway will pay a total of £11.6m consisting of £5.8m payment in lieu of a financial penalty, which will be directed towards delivering the National Strategy to Reduce Gambling Harms, and will divest a total of £5.8m, the majority of which to go to victims where it has been found, or could reasonably suspected to be, proceeds of crime.

Betway has also committed to the following:

• An independent review of current policies and processes, its operation, resourcing, quality control and oversight.
• A compliance led review of all current / active UK customers who have not been reviewed in the past six months and review applying its current processes for anti-money laundering and social responsibility.  It will dip-sample to test the robustness of the review.
• A full assessment of its top 25 customers by GGY and top 25 customers by deposit for years 2015, 2016, 2017 and 2018 to consider whether any of the failings identified are evidenced and if so, to divest the GGY where appropriate.
• Review any new high or higher risk customers as may be identified by the Commission.  Any recommendations arising out of these reviews will be fed back into the improvements that could be made to current processes and dealing with divestment.
• A review of the next 12-month compliance development road maps.
• Ensure that all personal management licence holders, senior management and key control staff undertake outsourced Anti-Money Laundering and social responsibility training.

Richard Watson, executive director at the Gambling Commission, said: “The actions of Betway suggest there was little regard for the welfare of its VIP customers or the impact on those around them.”

He said that the case illustrated why operators’ management of high value customers must change and why the industry must do everything to interact with customers responsibly.

“As part of our ongoing programme of work to make gambling safer we are pushing the industry to make rapid progress on the areas that we consider will have the most significant impact to protect consumers. The treatment and handling of high value customers is a significant piece of that work and operators are in no doubt about the need to tackle the issue at speed.

“We have set tight deadlines for when we expect to see progress and if we do not see the right results then we will have no choice but to take further action. This case highlights again why progress needs to be made.”

The investigation found that as a result of a lack of consideration of individual customers affordability and source of funds checks the operator allowed £5.8m of money to flow through the business which has been found, or could reasonably be suspected to be, proceeds of crime. The majority of this money will now be divested and returned to victims. The regulator probe also revealed inadequate management oversight and investigations into responsible personal management licence holders are ongoing.

Gambling Commission Chief Executive Neil McArthur set the industry tough challenges last October as part of a drive to make gambling in Britain safer. One of those focused on the incentivisation of high value customers. Industry-led working groups, supported by the Betting and Gaming Council, are also focusing on ethical game design and the use of advertising technology.

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Revenue for the year’s third quarter increased 16.2 per cent to €33.2m, (2018: €28.6m), despite headwinds in Sweden coupled with lower activity in the UK and other markets following regulatory changes within payment methods, anti money laundering and responsible gaming.

B2B proved to be the main driver of the increase, with 37.9 per cent rise to €21m (2018: €15.2m) reported, which sees the segment constitute 63 per cent of total revenues.

In contract B2C made up the remaining 37 per cent with €12.2m, an eight per cent drop from €13.3m, mainly due to a lower contribution from sports compared to 2018 when the World Cup boosted performance.

EBITDA for the period decreased by 16 per cent to €5.2m (2018: €6.2m) with operating income falling 25 per cent to €4.2m (2018: €5.6m), driven by higher marketing expenditure for B2C as the firm enters a number of new regions outside the EU which are expected to affect performance from 2020.

On a geographical basis revenue fell in the Nordic and UK regions to €6.5m (2018: €7.7m) and €4.6m (€5.7m), with the rest of Europe surging 63 per cent to €20.9m (2018: €14.9m) and the rest of world rising to €1.2m.

Tsachi Maimon, CEO of Aspire Global, said of the firm’s market expansions: “In addition to extending our control over the value chain, we are broadening our market presence within and outside of the EU, with at least three new markets launches for 2019 and 2020, respectively.

“We continue to focus on regulated markets, which comes with great opportunities as well as significant challenges. We are constantly adjusting routines and tools to comply with local regulations and we are hoping to streamline these processes going forward. 

“We recently implemented a number of extensive internal procedures within anti money laundering and responsible gaming in the UK to ensure full compliance with the new requirements, as well as changes in the Dutch offering as part of the preparations for coming regulation in the Netherlands, expected in a year from now.” 

Before giving a brief projection of Aspire’s future performance: “Despite the ongoing transformation of the igaming industry and the various regulatory changes that tend to affect activity in the short-term, for instance in the UK, Aspire Global continues to sustain a strong and profitable growth. 

“We are able to do so thanks to a wide market presence, a differentiated partner portfolio and a broad offering – most recently through the acquisition of Pariplay, the integration of which will help us to capitalise further on our game assets. 

“Thanks to our solid balance sheet, we are also able to continue the search for additional M&A-opportunities. All in all, we remain confident in our ability to meet our financial targets for 2021, €200m in revenues and €32m in EBITDA.”

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