2. Identifying and recording big prize winners Keeping a register of winners Checking the exact identity of online gaming customers In-depth review of all complex transactions and possible blocking of financial transfers Breaking off commercial relations in the event of non- identification of customers Detection of atypical gaming events/behaviour and opening of files Submission of suspicious transaction report files to the national financial intelligence unit Assessment and management of money laundering and terrorism financing risks Training staff in anti-money laundering obligations LAND BASED NETWORK ONLINE GAMING

3. Process FLAGGING OF ATYPICAL EVENTS/BEHAVIOUR ANALYSIS SUSPICIOUS TRANSACTION REPORT

4. Context: Fight against money laundering Characteristics of gaming offers Land based network Customer anonymity, Big winners identification Gaming service provided through retailers Online gaming Identification of customers and winners Gaming service provided directly by the operator

5. COMBATING MONEY LAUNDERING IN A LAND BASED NETWORK

6. What are the risks? Laundering money Laundering by playing Integration of large quantities of sales cash via expertise games offering an attractive pay out rate (sports betting) Possibility of rigging an event subject (match fixing) to betting, making it possible to secure pay out rate for the player Laundering without playing Purchase of winning receipts or tickets directly or through an intermediary (ALL GAME TYPES) Use of sales cash by the retailer to pay small prizes that are reimbursed by the operator

7. FIGHT AGAINST MONEY LAUNDERING -Alarms -Blocks Supervisory service files providing information and detailing stake trends Recurrent winnings and analysis of stakes by a supervisory and control body Inspection of the network Supervision and control of point of sale activity Analysis of the winner files Use of information ‘from the ground’ Vigilance: What methods?

8. What are the difficulties and what are the solutions? -Retailer’s intermediary role -Knowledge of the player and the bet amounts ( Know Your Winner) -Monitoring of retailers’ activity by the operator (monitoring, control and inspection) -Direct collaboration with government services in the event of doubt in order to firmly establish players’ identity -Organisation enabling this collaboration to work effectively: State monopoly

9. The winnings collected by Mr F result from large stakes placed over seven months in 2012 in nine sports betting outlets in Marseille and the surrounding area Significant winnings (>€1 million) paid in through a large number of cheques and transfers (several dozen) are recorded in the name of Olivier F, a 36-year-old Marseille resident. It is possible to analyse all his winnings from sports bets (>€1 million) because there is only one operator in France offering and paying out on sports betting. This means that a suspicious transaction report can be filed. This is done by the operator. Analysis of the operator’s winners’ file Olivier F is flagged as a recurrent winner of large amounts in the Marseille area Case of detection and suspicion of money laundering: why the monopoly is important

10. The winnings collected by Mr F result from large stakes but have not been detected because they are divided between a number of establishments belonging to a number of operators Analysis of the operator’s winners’ file Olivier F is not flagged as a recurrent winner, because he has collected his winnings through a number of different operators Case of detection and suspicion of money laundering: case where a number of different operators exist Detecting the recurrent winnings and revealing the large stakes bet by the player are not possible because the bets are placed and the winnings paid through a number of different operators

11. COMBATING MONEY LAUNDERING IN ON LINE GAMING

12. What are the risks? Laundering money Laundering by playing Integration of large quantities of sales cash (prepaid cards) via specialist games offering an attractive pay out rate (sports betting) Collusion: in poker games particularly Laundering without playing Rejection of deposits of amounts of money (often stolen bank card), the fraud aspect being more important than the laundering aspect Payment of gaming winnings into a bank account that does not belong to the winner

13. Vigilance: how is monitoring carried out? The gaming offer may facilitate laundering of amounts bet by players benefiting from a sure bet or taking advantage of an odds error The rigging of an event may facilitate money laundering Monitoring of the sports offer and the sports event A good pay out rate is an important pre-condition for a potential money launderer Monitoring of the pay out rates In the event of a win, a player may choose to reinvest his/her winnings in new bets or make a withdrawal from his/her account and use the new money to credit the player account (recycling) Monitoring of ‘recycling’ If a player wishes to withdraw amounts that have not resulted from a win, he/she arranges for a transfer from the operator, which will appear on his/her bank account as being possible gaming proceeds, whereas this is not the case at all Withdrawal with no betting

14. What are the difficulties and what are the solutions? -Identity theft with or without the use of forged documents -Integration of cash through prepaid cards -Use of a number of accounts by accomplices within operator-imposed limits - Pay out rate, an important consideration for money laundering, particularly in live betting -Banning or increased monitoring of prepaid cards -Analysis of the IP addresses used -Control of bank and identity documents: limits on copy-based work and problem of bank account detail slips, which are not official documents -Limit pay out rates and control their use

15. Example no.1: using accounts opened by accomplices makes it possible to circumvent limits and facilitates money laundering Order giver The bets are placed from the same IP address The stakes are virtually identical and concern the same sports (basketball and football) and bets The legal thresholds are circumvented, the total amounts bet come to several thousand euros and the pay out rate is nearly 100% Used in 2011, 16 accounts opened for online sports betting in the names of people living in Valenciennes, Amiens, Quimper and Nantes

16. Example no. 2: using forged identity and bank documents facilitates money laundering Forging of bank account detail slips Different typography; the account does not belong to the person in question. Forging of identity documents Different typography; name changed, identity theft and possibility of opening a number of player accounts

17. Example no. 3: using a convenience account and prepaid cards facilitates money laundering A 73-year-old woman bets large amounts of money in poker games (several tens of thousands of euros) having paid €40,000 into her account over a period of a few months, using only prepaid cards. Pseudonym used: ruse1 Analysis of the gaming activities, the postal and IP connexion addresses and the deposits reveal that the account is used by other members of the same family who have set up a money laundering system.

18. Conclusion (1/2) In a Land Based Network: The duty of vigilance must take into account constraints linked to the retailer’s intermediary role and the difficulty of obtaining reliable knowledge about players. The key factors determining the success of the fight against money laundering are: – Perfect coordination between a responsible operator, the specialised criminal investigation units and the financial intelligence units –Recording winners with an identity card above a certain limit is an indispensable pre-condition –The principle of a single physical network operator to prevent the dispersion of amounts to be laundered by a player or a criminal organisation

19. Conclusion (2/2) On Line: The duty of vigilance must be applied taking into account the fact that the relationship is a remote one: –Real risk of forgery of identity and bank documents –Stake limits can be circumvented by using a number of accounts (for example in the organisation of a criminal network) => strict checks on the customer’s registration history – Prepaid cards make it easier to inject cash for laundering The implementation of an effective control system to fully control these three risks requires appropriate technical, human and legal resources.