The Gambling Commission has announced on its website that it has formalised its existing agreement with HM Revenue and Customs (“HMRC”) to reflect changes brought by recent money laundering legislation. In so doing, it states as follows:
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), sets out the following supervisory requirements relevant to the agreement:
- The Commission is the supervisory body for casinos (Regulation 7(1)(d));
- HMRC is the supervisory body for money service businesses (“MSB”) not supervised by the Financial Conduct Authority (Regulation 7(1)(c)(ii));
- Where there is more than one supervisory authority for a relevant person, the supervisory authorities may agree that one of them will act as the supervisory authority for that person (Regulation 7(2)).
MSB supervision in casinos
Under the MLR 2017, MSB is defined as a natural or legal person which by way of business operates a currency exchange office, cashes cheques made payable to customers or transmits money (or any representation of monetary value) by any means.
It is understood that certain casinos offer, incidentally to their main gaming activities, MSB services (3rd party cheque cashing, foreign currency exchange and 3rd party money transmission activities) for their casino customers. Such businesses therefore fall to be supervised for MLR 2017 purposes by both the Commission and HMRC.
Both the Commission and HMRC agree to the need for a risk-based approach to supervision and this will need to be conducted by one statutory supervisor. Joint supervision would likely cause poor compliance outcome, dual costs and complication for all the parties involved.
Accordingly, the Commission and HMRC have agreed that the Commission will act as sole supervisor of both the casino and MSB activities of those casinos who are carrying out incidental MSB activities.
Under this agreement:
- The Commission will undertake to draw the attention of the relevant businesses (casinos) to the guidance for MSBs issued by HMRC, particularly regarding risk indicators for each type of money service business, which is covered in section 10 of the current guidance (March 2018).
- HMRC confirms its willingness to support the Commission if there are any issues involving MSB activity at casinos on which it would welcome assistance.
- The Commission will publicise this agreement to relevant casinos and publish the agreement in the way it considers appropriate (Regulation 7(3)). HMRC will ensure its relevant staff are aware of the terms of this agreement
- The Commission will update HMRC annually on the number of casinos known to be covered by these arrangements.
This formalisation of a pre-existing arrangement between the Gambling Commission and HMRC (to which reference is made within paragraph 1.40 on page 12 of the 4th edition (March 2019) of the Commission’s AML/CTF Guidance for remote and non-remote casinos entitled “The prevention of money laundering and combating the financing of terrorism”) should not serve to bring about any changes in practice insofar as casinos regulated by the Commission are concerned.
HMRC’s Guidance for MSBs entitled “Anti-Money Laundering Supervision: Money Service Businesses” (section 10 of which the Commission refers to above) can be downloaded below.