European Union
EC Rejects Call to Reform Expert Group on Gambling
The European Commission (EC) has stated that will not support the re-establishment of an “Expert Group on Online Gambling” – a cross member state collaborative body supported by 14 regulatory agencies.
Dutch gambling regulator Kansspelautoriteit (KSA) published the EC’s response to a letter sent by KSA Chairman Rene Jansen on behalf of European regulators requesting to reinstate the group which had been decommissioned in 2018.
Regulators backed the reinstatement of an Expert Group to exchange knowledge and best practices with regards to governing gambling and protecting national consumers from risks and harms.
Jansen’s letter further stated that regulatory cooperation was required to secure greater oversight on technical requirements and to better evaluate the legislative outcomes of member-states governing their regulated gambling marketplaces.
“The work of the Expert Group was particularly successful. We achieved results that benefited consumers, national authorities and the gambling sector and the active participation in the group also demonstrated that member states are well equipped and willing to achieve positive outcomes together. And we still believe this to be the case,” Jansen said.
Issuing a response, the office of European Commissioner Thierry Breton referred to the EC’s original verdict to decommission the group taken in December 2017.
The expert group was deemed as no longer viable following the European Court of Justice (ECJ) arbitrating 30 cases related to gambling, in which all casework stated that national regulations superseded EU rules.
The EC underscored that gambling laws and standards would be maintained as the domain of the individual member state – which can choose to apply its legislative preferences to taxation, the licensing of market incumbents, industry standards and how a member state should protect its national consumers from harms.
The Commission can only intervene on member-states gambling laws if they are deemed to have breached the wider EU policies on market competition, fair business policies and state aid rules.
Replying to Jansen’s concerns, the EC responded that gambling regulators had the support of individual policy units carrying comprehensive oversight on “anti-money laundering (DG FISMA), consumer and youth protection (DG JUST), the prevention of addiction (DG SANTE) or issues of taxation (DG TAXUD)”.
“At this stage, our Directorate General does not intend to reverse this decision and to reinstate the Expert Group on Gambling Services under its responsibility,” the EC letter concluded.
Compliance Updates
THE EU AI ACT AND ITS IMPLICATIONS FOR THE IGAMING INDUSTRY
By: Danil Emelyanov, Head of AI Labs, Betby
First of all, the regulation of AI is inevitable. The EU was the first to step into this arena with the EU AI Act, setting a precedent that other parts of the world will likely follow. This proactive approach positions the EU as a leader in AI governance, but it also means that regions adopting similar regulations later might benefit from the lessons learned and adjustments made in response to early implementations.
The downside is that those who come last to the regulatory scene might indeed benefit the most. For instance, the competitive landscape in AI innovation currently favors new entrants in the US or UK over Europe, partly due to the stringent compliance requirements of the EU AI Act. This regulation could potentially affect the flow of investments into European AI ventures, making regions with more flexible or yet-to-be-defined regulations more attractive for AI start-ups and investors.
However, the positive aspect is the collaborative approach the EU has taken in drafting this legislation. It’s not a one-way mandate from legislators to businesses; rather, it involves dialogue and input from various stakeholders, including tech companies and open-source communities. Notably, there are exemptions for open-source AI models, likely influenced by contributions from French and German tech firms like Mistral and Aleph Alpha, which have been vocal about the importance of open-source innovation.
The AI Act predominantly focuses on regulating foundation models rather than classic machine learning models. The legislation sets a computational power threshold at 10^25 floating-point operations per second (FLOPS), below which AI systems are generally exempt from stringent regulations. This threshold implies that unless an organization is training a model on the scale of GPT-3.5 or larger, compliance concerns are minimal. This serves as a reminder of the value of simpler machine learning techniques like logistic regression and random forests, which can effectively solve business problems without the complexity and regulatory scrutiny of more advanced models.
For the iGaming industry, the implications of the EU AI Act are relatively manageable. Our legal teams will diligently study the law to ensure compliance, even if it means a slight reduction in the accuracy of our models. This cautious approach is necessary because the fines for non-compliance are substantial, ranging from 1.5% to 7% of global turnover, depending on the severity of the offense and the size of the company. Additionally, some aspects of the Act are vaguely defined, which could pose challenges in interpretation and application.
Despite these challenges, the iGaming sector should remain vigilant. Staying informed about regulatory updates and actively engaging with the regulatory process can help mitigate risks and ensure smooth compliance. The EU AI Act sets high standards for transparency, accountability, and ethical AI use, which, whilst demanding, also push the industry towards more responsible AI deployment.
Compliance Updates
EGBA Welcomes European Parliament’s Approval Of New EU Anti-Money Laundering Framework
The EU’s new anti-money laundering package aims to create a more consistent regulatory framework and will benefit online gambling operators by standardising AML rules and reporting requirements across member states.
Brussels, 24 April 2024 – The European Parliament has approved the EU’s new anti-money laundering (AML) package at its plenary sitting today, marking a significant milestone towards a new EU framework for combatting financial crime. The European Gaming and Betting Association (EGBA), representing Europe’s leading online gambling operators, welcomes the Parliament’s approval of the new AML package and believes the incoming rule changes will strengthen the EU’s approach to tackling money laundering.
The new package will contain:
- A single rulebook regulation – with provisions on conducting due diligence on customers, transparency of beneficial owners and the use of crypto-assets.
- The 6th Anti-Money Laundering Directive – containing national provisions on supervision and national AML authorities, as well as on the access of authorities to necessary and reliable information, e.g. beneficial ownership registers.
- The establishment of the European Anti-Money Laundering Authority (AMLA) – which have supervisory and investigative powers to ensure compliance with AML requirements, operating in conjunction with national AML authorities.
EGBA believes the new rules will benefit Europe’s online gambling operators by ensuring a consistent regulatory approach across EU member states. Another important feature, under the competence of AMLA, will be the creation of a harmonised reporting format for Suspicious Transaction Reports (STRs). This will ensure that Europe’s online gambling operators encounter the same STR requirements across all EU member states, thereby setting clear and consistent expectations that will reduce administrative burdens and costs.
To assist online gambling operators in complying with the EU’s new AML rules, EGBA has developed industry-specific guidelines on anti-money laundering which apply a risk-based approach and include practical measures that operators can take – on customer and business risk assessments, customer due diligence processes, suspicious transaction reporting, and record keeping. EGBA members already apply the guidelines and submit annual reports to EGBA that summarise their progress in implementing its measures. The guidelines are also open to all operators based in the EU and EGBA encourages operators to sign up to them.
The AML package now awaits formal adoption by the Council of the EU, expected in May, before being published in the EU’s Official Journal.
“We welcome the European Parliament’s approval of the new anti-money laundering package. The new framework will set high standards and ensure greater consistency in the application of AML rules across the EU. Online gambling operators, especially those operating in multiple countries, will benefit from a single rulebook and harmonised reporting requirements that will unravel national complexities. We will look to review our industry guidelines on AML to ensure their alignment with the new EU rules. By signing up to the guidelines, operators can already prepare themselves for the incoming changes in the EU rules and join our members in their efforts to proactively and positively contribute to the EU’s fight against money laundering.” – Dr. Ekaterina Hartmann, Director of Legal and Regulatory Affairs, EGBA.
Source: EGBA
Compliance Updates
European Union Updates Country List for Stricter AML Checks
The European Commission, the executive branch of the European Union (EU), has updated its list of high-risk countries, from which players should be subjected to stricter customer checks by gambling operators.
Based on Directive (EU) 2015/849, Article 9, the Commission identifies any high-risk third countries that have strategic deficiencies in their regime on anti-money laundering and countering the financing of terrorism.
As such, operators based in the EU that are offering services to these countries or dealing with players from these nations are obliged to carry out heightened vigilance checks.
The list was first published in July 2016 and has been updated a number of times as further countries of concern are identified and flagged by the Commission.
The latest countries to be added to this list – in an update published last month – include Burkina Faso, the Cayman Islands, Haiti, Jordan, Malo, Morocco, Myanmar, the Philippines, Senegal and South Sudan.
Other nations included on the list include Afghanistan, Barbados, Cambodia, the Democratic People’s Republic of Korea, Iran, Jamaica, Myanmar, Nicaragua, Pakistan, Panama, Syria, Trinidad and Tobago, Uganda, Vanuatu, Yemen and Zimbabwe.
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