Financial Crime World

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AML/KYC Compliance for Online Payment Systems in Liechtenstein: A Growing Concern

The online gambling industry has experienced rapid growth in recent years, with a global market valuation of over $450 billion in 2022 and predicted to expand at a compound annual growth rate of 11.7% from 2023 to 2030. However, this growth comes with increased risks of money laundering (ML) and terrorist financing (TF), making AML/KYC compliance a critical concern for online payment systems operating in Liechtenstein.

Vulnerabilities in the Online Gambling Industry

The online gambling industry is more vulnerable to ML/TF due to its cross-border nature, rapidity of transactions, non-face-to-face interactions, low number of investigations and prosecutions, and use of multiple accounts. According to MONEYVAL, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, these vulnerabilities make online gambling a high-risk sector.

Key Vulnerabilities

  • Cross-border nature
  • Rapidity of transactions
  • Non-face-to-face interactions
  • Low number of investigations and prosecutions
  • Use of multiple accounts

AML Requirements for Online Gambling

Online gambling entities must comply with AML requirements similar to those applicable to financial institutions, including customer due diligence (CDD), transaction monitoring, and suspicious activity reporting. In Liechtenstein, online payment systems operating in the gaming industry are subject to national regulations, such as the Anti-Money Laundering Act (AMLA) of 2020.

AML Requirements

  • Customer due diligence (CDD)
  • Transaction monitoring
  • Suspicious activity reporting

Regulatory Scrutiny and Enforcement

The European Commission has classified the level of threat posed by money laundering to online gambling as “very significant” (level 4). In response, regulators have increased scrutiny and enforcement actions against non-compliant operators. For example, in 2022, a major gaming operator was fined over £12 million for AML and social responsibility failures at both its online and land-based businesses.

Regulatory Actions

  • Increased scrutiny
  • Enforcement actions against non-compliant operators

Future of AML Compliance in Gambling

The expected growth of the sector and increasing regulatory scrutiny will soon require online gambling vendors to apply more rigorous AML regulations on their clients and users. This may reverse the trend of online gambling rather than physical locations, or lead to new approaches in response to emerging challenges.

Future Developments

  • Increased AML regulations
  • New approaches to address emerging challenges

Conclusion

Robust and efficient customer monitoring is essential for online payment systems operating in Liechtenstein’s gaming industry. As regulatory scrutiny increases, operators must prioritize AML/KYC compliance to mitigate risks of ML/TF and maintain a legitimate business model.

Key Takeaways

  • Robust customer monitoring is essential
  • Prioritize AML/KYC compliance