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Industries: Gambling service providers
Gambling service providers are subject to customer due
diligence, record keeping and reporting obligations under the Anti-Money
Laundering and Counter-Terrorism Financing Act 2006.
The Anti-Money Laundering and Counter-Terrorism
Financing Act 2006
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth)
(the Act) which came into effect in December 2006 implements the
first tranche of the Government's AML/CTF reforms. The Act is supplemented by
Rules (which contain the practical, operational detail of the AML/CTF regime and
have legislative force) and Guidelines or Guidance Notes. These Guidelines or
Guidance Notes will be issued by the AML/CTF regulator, the Australian Reports
and Transaction Analysis Centre (AUSTRAC). They do not have
legislative force but are intended to assist businesses affected by the Act to
interpret their obligations.
Timing
The AML/CTF obligations in the Act will commence in stages over a two-year
period.
The schedule for implementation of obligations relevant to gambling service
providers is as follows:
- 13 December 2006: obligations relating to:
- electronic funds transfer instructions and records of some
electronic funds transfer instructions;
- records relating to transaction records, customer-provided
transaction documents and transferred ADI accounts;
- 12 June 2007: obligations relating to:
- AML/CTF compliance reports (this has been put back to 31 March 2008)
- 12 December 2007: obligations relating to:
- customer identification and records of identification procedures;
and
- AML/CTF programs;
- 12 December 2008: obligations relating to:
- ongoing customer due diligence; and
- suspicious matter and threshold reporting.
A 15-month prosecution-free period will follow each of the stages outlined
above. During that period, AUSTRAC will only take criminal or civil penalty
action against a reporting entity where the reporting entity has manifestly
failed to take steps towards compliance with its obligations.
Core requirements
Core requirements that will affect gambling service providers include:
- customer due diligence (including enhanced customer identification and
verification procedures and transaction monitoring);
- suspicious matter and threshold reporting obligations;
- development and compliance with an AML/CTF program; and
- record keeping.
For an analysis and summary of these core obligations (and of the AML/CTF Act
generally) refer to Overview.
Who is affected?
Gambling service providers are regulated by the AML/CTF Act when they provide
one or more of 14 designated services listed.1 These range from pure
betting activities such as accepting a bet and paying out winnings (designated
services 1-10) to financial services such as providing a betting account
facility to gamblers (designated services 11-14). The designated services are:
- receiving or accepting a bet;
- placing or making a bet on behalf of a person;
- introducing a person who wishes to make a bet to a person who is willing
to receive it;
- paying out winnings;
- allowing a person to play on a gaming machine;
- accepting the entry of a person into a game;
- exchanging money for gaming chips;
- exchanging gaming chips for tokens;
- paying out winnings in respect of a game;
- as controller of a gaming machine paying out winnings;
- as an account provider (who provides services 1,2,3,4,6,7,8, or 9)
opening an account for a person, where one of the purposes of the account is
to facilitate services 1,2,3,4,6,7,8, or 9;
- as an account provider allowing a person to become a signatory to such
an account;
- as an account provider allowing a transaction to be conducted on an
account to facilitate services 1,2,3,4,6,7,8, or 9;
- exchanging currency where the exchange is provided by a person who
provides a service under 1,2,3,4,6,7,8, or 9.
Gambling service providers who carry out these activities are required to
comply with the AML/CTF obligations noted above.
Chapter 10 of the AML/CTF Rules, however, sets out certain
exemptions for some gambling service providers.
Customer identification
The Rules provide exemptions from the customer identification procedures for
designated services where these are provided by:
- Casinos (except for online gambling services); and
- where the designated service is any of items 1,2,4,6,7,8, or 9
above; and
- involves an amount of less than $10,000; or
- where the designated service is any of items 1,2,4,6, or 9 above;
and
- the service involves an amount of $10,000 or more and involves the
customer giving or receiving only gaming chips or tokens.
This exemption covers betting activities, such as paying out winnings and
buying or cashing in, chips where the amount involved is less than $10,000
(or where the amount is more than $10,000 when it involves gaming chips).
It does not extend to where the casino opens an account for a customer,
allows a transaction to be conducted on that account or exchanges foreign
currency. Gamblers who want to open accounts with casinos must therefore be
identified/verified before they do so no matter what the amount is in the
account.2
- On-course bookmakers and TAB operators; and
- the designated service is either item 1 or 2 above; or
- where the designated service is item 4 above and involves an amount
of less than $10,000.
- Gaming machines; and
- the designated service is either item 5 or 6 above; or
- the designated service is either item 9 or 10 above and involves an
amount of less than $10,000.
It should be noted, however, that these customer identification
exemptions do not apply where the casino, bookmaker, TAB operator or gaming
machine provider determines in accordance with its enhanced customer due
diligence program that it should obtain and verifiy KYC information about a
customer.
Record keeping
The Rules also provide an exemption from the obligation in the Act to retain
transaction records where the gambling service is provided by a:
- Casino; and
- the designated service is either item 1,2 or 6 above (or is item 4
above but is provided only by giving the customer gaming chips or
tokens).
- Bookmaker or TAB operator; and
- the designated service is either item 1,2 or 6 above.
Reverification requirements
Although casinos, bookmakers and TAB operators must re-verify customers as
required by the Act, because the re-verification must be carried out either
within 14 days (of the circumstance that gave rise to the need to re-verify) or
before the casino, bookmaker or TAB operator provides another designated service
to the customer, it may not be necessary to re-verify the customer at all if it
that customer does not conduct another transaction.
Online gambling
The Rules provide that online gambling service providers can carry out
customer identification/verification after a designated service has been
carried out where:
- the customer is required to open an account to obtain the particular
service; and
- the online gambling service provider does not allow the customer to
withdraw any funds from the account before the customer identification
procedure is carried out.
The identification/verification must in any event be carried out within 90
days of the account being opened. Accordingly, an online gambler can open an
account and place bets without being identified for up to 90 days but will not
be able to withdraw any funds during that time. The advantage would appear to be
that the information does not need to be verified before bets are placed and so
does not hold up the betting process.
Footnotes
- in Table 3 of Section 6 of the Act.
- This is consistent with the position under the Financial
Transaction Reports Act 1988 (Cth).
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