The first quarter of 2020 has brought significant changes into the EU gambling industry operating procedures. With the 5th Anti-Money Laundering Directive (5th AMLD) entered into force in January and the ban on credit cards introduced by the Gambling Commission of Great Britain in April, customer transactions are becoming more restricted.
The Gambling Commission has announced a ban on consumers in Great Britain to use credit cards to gamble, after a public consultation was carried out between August and November 2019.
According to the UK Finance, 800,000 consumers in the UK, out of 10.5 million of those gambling online, used a UK-issued credit card for gambling in 2018. The research undertaken by the Gambling Commission shows that 22% of customers using credit cards to gamble are classed as problem gamblers. There is also evidence that some gamblers, who accumulated debts through gambling, used credit cards.
Some consumers can be at a higher risk due to credit card gambling fees. If a credit card allows you to make gambling transactions, the charge will typically be categorized as a cash advance. This is because gambling charges are considered cash equivalents and attract a fee of 3- 5%. Cash advances are also commonly exempt from any grace period, which means the gambler will be charged interest on gambling transactions from the day they’re made.
The ban, which is applicable both to the online and offline gambling products, except of non-remote lotteries, is aimed to protect vulnerable people from gambling related harms.
According to the 5th AMLD, the use of prepaid cards was also restricted in relation to the limits of monthly payment transactions and the maximum amount stored electronically. Both limits were reduced from €250 to €150. The transaction limit, made by an anonymous prepaid card, should be under €50 per single transaction and repeated use of prepaid cards should be marked by the EU operator as a red flag. The operator is to identify the customer in the case of remote payment transactions where the transaction amount exceeds the amount equal to €50. If appropriate requirements of enhanced due diligence are not met, payments made through anonymous prepaid cards issued in third countries may not be accepted.
The repeated use of e-wallets might be a potential red flag as some e-wallets accept cash on deposit or cryptocurrencies. The duty of the EU Member-states is to ensure that the providers of crypto-fiat exchange services are fully registered with the necessary national authorities. It is firmly established that virtual currency platforms and wallet providers shall be considered ‘obliged entities’ and so are deemed to have the same responsibilities as other financial institutions and online casinos, such as monitoring transactions and effectively implementing customer due diligence. Cryptocurrency e-wallets are to be verified and the central database of users’ identities and wallet addresses are to be made accessible to FIUs.
The credit card ban by the Gambling Commission, and the customer transactions restrictions, are part of the ongoing work to reduce gambling harm. EU Gambling Authorities working alongside with the finance industry will continue to ensure consumers only gamble with money they can afford to spend, which will result in further compliance regulations with regards to Responsible Gambling and AML procedures for EU licenced operators.
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