Multiple Breaches in the AML Act land Betfair in Trouble in Denmark
Author:
Muhammad Gregory
The Danish Gambling Authority, Spillemyndigheden, recently detected four violations in the country’s Anti-Money Laundering Act (AML) caused by licensed gambling operator Betfair International. The regulator confirmed the imposition of three injunctions and a prosecution charge on the operator for the breach of the first subsections of sections 7 and 8, which state directives related to business procedures and risk assessment concerning money laundering.
Spillemyndigheden has issued three orders against Betfair?Nick Karvounis/Unsplash
Since the legalization of gambling in Denmark, the Danish Gambling Authority has established straightforward rules and regulations under the country’s Gambling Act. In 2012, a partial liberalization of gambling reformed the gambling market of the Nordic state. Now, all segments of land-based and online gambling are legal in Denmark. The people residing in the jurisdiction of the Danish Gambling Authority are free to access and participate in online casino games, sports betting, poker, lottery, and other gambling-related activities. The regulator advises the masses to participate in these activities with caution. This caution is issued to keep players away from developing harmful gambling traits and keep them away from the platforms of gambling operators that are not licensed in Denmark. Extensive player safety measures force the regulator to battle illegal and illicit activities that revolve around multiple segments of gambling. This means that the Danish Gambling Authority has to fight illegal operators while simultaneously monitoring licensed operators to ensure compliance with the nation’s Gambling Law.
While the regulator deals with detected illegal operators, there have been multiple instances in which a licensed operator has violated the Gambling Law of Denmark and faced penalties for it. Recently, one of the world’s largest online betting operators, Betfair, has been held responsible for breaches in the AML. Betfair is owned by Flutter Entertainment – an international sports betting and iGaming entity that also owns renowned brands like FanDuel, Paddy Power, and more. Betfair’s operation is divided into two segments – UK and International. While it was established in the United Kingdom, the International segment’s activity is conducted from the headquarters in Malta and Spain. While the operator states that it is committed to safer gambling, it has landed itself in trouble in Denmark after the nation’s regulator confirmed multiple breaches in the AML Act. As a result, Spillemyndigheden has issued three orders to Betfair. These orders highlight the violation and comprise instructions that help the operator rectify its errors to avoid repeating them in the future.
The violations came in Section 7, Subsection 1, and Section 8, Subsection 1. The former revolves around the aspect of risk assessment, while the latter specifies directives for business procedures. According to the Danish Gambling Authority, Betfair’s risk assessment measures did not comply with the prerequisites specified in the AML Act. The same compliance issue was detected in the aspect of business procedures. After detection, the regulator released three orders for the operator. Order A was to rectify the risk assessment aspect of the operator in a way that it complies with the relevant section of Denmark’s AML Act. The rectification will force Betfair to assess individual inherent risk factors separately. As per Betfair’s business model, these assessments were being conducted collectively. Order B consisted of three issues around the rectification of written business procedures for customer due diligence measures. Betfair will have to tweak these measures so that they comply with Section 10, Subsection 1(1) of the AML. The business procedures also failed to consider how the operator knows if a hired employee is a convict.
According to the Danish Gambling Authority, not being aware if the employee is a convict or not increases the risk of illicit activities like money laundering and terrorist financing. Hence, a rectification of that procedure was ordered. The third and final part of Order B comprised rectifications to Betfair’s internal control measures, including information about the frequency and intensity of internal control. The final order, Order C, was issued because the Flutter Entertainment-owned entity failed to document internal checks that look at several aspects, including the ones mentioned earlier and others like notification obligations, information storing, and employee screening. Along with the three orders, the Danish regulator has also provided Betfair a deadline for rectifying the aforementioned aspects and measures. The UK-Based operator has three months to fulfill Orders A and B. A period of one year has been granted to Betfair to fulfill Order C. Apart from the orders, the regulator had also sent an indictment to the operator due to its previous business procedures. However, that violation has ceased.
Betfair was penalized in Sweden for illegal betting in April
Denmark is not the only Nordic state where the gambling regulator has reprimanded Betfair. Earlier this year, the Swedish Gambling Authority, Spelinspektionen, issued a warning and a fine to the UK-based operator for allowing its users to bet on the U21 Allsvenskan. Allsvenskan is the nation’s top-tier club football league, and the U21 Allsvenskan is exclusively for academy players of the Swedish football clubs.
In Sweden, sports betting is only legal as long as the bets are placed on games being played in the country’s top four club football divisions. The U21 Allsvenskan does not fall under that category, but still, Betfair allowed bettors to wager on those games. This decision attracted a stern warning from the Swedish regulator and also a fine of SEK 4 million. Betfair still holds a commercial online gambling license in Sweden, but repeating the violation in the future could put its permit at stake.
Annual GGR dipped in Denmark last year
The regulated gambling market of Denmark is quite competitive, but last year’s performance was not as promising as it was initially expected. Plagued by the Covid-19 pandemic, all forms of land-based gambling activities ceased in 2020. The second and third waves caused a similar situation in 2021. Players turned to online gambling and participated in several games during that period.
The markets properly opened with all segments last year. The gambling authority and operators expected an increase in annual gambling revenue but were disappointed to note a 2.8 percent year-on-year (YoY) decrease after the gambling segment collected an annual Gross Gaming Revenue (GGR) of DKK 10.1 billion. The sum was DKK 287 million less than the annual GGR of 2021. All gambling segments recorded a drop in revenue generation, except for land-based casinos and gaming machines, as they were finally active after lockdown restrictions were lifted.
