European officials are pushing ahead with plans to roll out extra money laundering checks to all forms of gambling, a move which is set to affect the way the gambling industry works across the entire European Union. Betting firms and slot machine operators have branded the European Commission’s proposals as “ridiculous” and “disproportionate”, with costs potentially running into hundreds of millions of euros. However Europe’s powerful national lotteries have backed the Commission and argue that tighter controls are much-needed as gambling is at a high risk of fraud.

Just last week, the Fourth Anti-Money Laundering Directive moved to its next stage in the European Parliament ahead of a vote set for March 2014, which it is expected to pass. National parliaments then need to approve the legislation, and it is likely to come into full effect by 2015 or 2016.

GamblingCompliance’s recent study Market Barriers: A European Online Gambling Study 2013/14 examined the proposed European Commission changes, which will reach every corner of the European gambling industry, and affect not just land-based outlets but also rapidly growing online businesses too.

Under Internal Market Commissioner Michel Barnier’s plans, all gambling firms would have to carry out identity checks on customers who bet, or even win, more than €2,000 (£1,700) in a single transaction. This would bring due diligence controls in line with those already in place for casinos.

Bookmakers, arcades, bingo firms and lotteries would all be included for the first time under the directive. Even gambling which involves an element of skill, such as poker, would be loaded with the extra checks. Banks and other payment providers will be among those affected too.

Resistance has already been fierce from Britain’s influential betting lobby. The Association of British Bookmakers (ABB), which includes the likes of William Hill and Ladbrokes, has predicted the extra checks will cause chaos on busy days and warned they will cost the industry more than £100m.

“This is a ridiculous proposal – they simply haven’t thought it through,” said ABB chief executive Dirk Vennix in July. “It’s unworkable, unnecessary and disproportionate. On a busy day at the Grand National or Glorious Goodwood you could have ten people trying to place a bet two minutes before the opening race.” Betting shops, where customers are used to relative anonymity and paying in cash, may have to install passport scanners and keep customer details for up to five years.

The Irish Bookmakers Association (IBA) has also confirmed its opposition to the plans, saying it will cost Ireland’s betting industry €15m to implement and €10m annually to administer.

It is not just commercial operators that are concerned about the changes. Finland’s slot machine monopoly, RAY, estimates that the directive would cost it €200m and affect the hundreds of small businesses which host the machines. The Finnish government is lobbying the European Commission on RAY’s behalf over fears that customer checks will cripple an industry that relies on small stakes but potentially large jackpots.

However, many of Europe’s national lotteries are far more sanguine. “We have consistently called loudly, clearly and unambiguously for an extension of the scope of the directive,” said European Lotteries president Friedrich Stickler when the directive was unveiled in February. He said that many lotteries already verify winners’ identities when their windfall exceeds a certain limit; although the trade group also welcomed lighter-touch due diligence for games with low stakes and winnings.

The European Commission’s impact assessment predicts only a marginal increase in costs for gambling operators. IT expenditure, additional staff recruitment and costs related to access to databases are all likely to hit the bottom line, according to the assessment. However, it also notes that this will be largely offset by existing “significant business as usual costs”, which include, for example, “efforts to counter the risks of fraud and cheating”.

Underpinning the draft directive is a “risk assessment” approach. The draft outlines a list of factors that could be considered as evidence for a lower or higher risk of money laundering. For example, transactions originating in other EU member states are considered to be of low geographical risk.

A number of rules from the third directive will also continue, such as recordkeeping and statistical data storage; reporting suspicious transactions; and checks on a beneficial owner’s identity.

Among the sanctions for “systematic failings” are public notices and administrative pecuniary retribution. In the case of legal persons, fines can be up to 10 percent of the total annual turnover in the preceding business year, while in the case of natural persons fines can be up to €5m.

As soon as the European Parliament passes the directive early next year, attention will turn to national parliaments. The directive sets the minimum standards for all member states, but countries can adopt even stricter anti-money laundering rules. The current draft gives countries two years to bring the laws into force, so expect plenty more lobbying from all angles by the industry before then.

About the Author

Daniel Macadam is the Europe Editor of GamblingCompliance, the leading online publisher of legal, regulatory, political and business information for the global gambling industry. GamblingCompliance provides impartial analysis to assist the industry track regulation and market developments around the world.
For more information on GamblingCompliance’s anti-money laundering e-learning course for European gambling, click here
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In Romania EU Focuses on Corruption, Loses Focus Overall

From the president’s brother having ties to long-time criminals, to scores of customs officials living far beyond their means with impunity, corruption is apparent at every level of Romanian society. Recent crackdowns are widely perceived as little more than ‘show operations’ designed to appease an EU harboring misgivings about having admitted Romania in the first place.

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08 February 2011

Handling Irregular Immigration in the EU

Abstract red and black map of Western Europe, courtesy of Coda/flickr
Creative Commons - Attribution-Noncommercial-Share Alike 2.0 Generic Creative Commons - Attribution-Noncommercial-Share Alike 2.0 GenericMap of Western Europe 

The two-tier system of national and supranational EU legislation in the field of Justice and Home Affairs has proven problematic for the implementation of measures designed to deal with Europe’s significant, but greatly exaggerated, challenge of irregular immigration.

By Diego Acosta for ISN Insights


Irregular or undocumented migration in the EU is a multifaceted phe­nomenon. Its complexity arises from the fact that irregular migrants are an amazingly heterogeneous category, raising ques­tions about the adequacy of dealing with it without addressing its various intricacies. Irregular migration has also been highly politicized, both at the national and EU levels, with rheto­ric often depicting it as an ‘invasion’. This politicization has in some cases led to its criminalization. However, this politicization is not matched by the number of irregular migrants actually entering the EU. According to the most reliable statistics, there were only between 1.9 and 3.8 million irregular migrants in 2008, barely representing between 0.39 and 0.77 percent of the total EU population of around 500 million.

To understand and correctly assess this phenomenon and European responses, it remains vital to explore the past, present and future of measures that the EU and its member states have implemented in an attempt to deal with the issue, most notably regularization procedures and the adoption of various European directives.

Why regularization matters

Irregular migration mostly follows from the lack of legal channels to enter or remain in a country, linked with the existence of an unregulated job market in certain sectors. The term ‘irregular migrant’ refers to a variety of phenomena and people, from third-country nationals who enter the territory of a member state without authorization by land, sea and air with the help of organized criminal networks of smugglers and traffickers, to the largest group of people that enter legally with a valid visa or under a visa-free regime, but “overstay”, to those who are unsuccessful asylum seekers who do not leave after a final negative decision. There is a last category which includes those who no longer fulfil the conditions of legal entry, stay or residence . Thus, holders of expired residence permits are de jure irregularly residing in a member state. This phenomenon, known as “befallen irregularity” , results from slow bureaucracy and arises in some member states when a third-country national becomes unemployed and cannot renew a temporary residence permit for example.

There are two main options in dealing with irregular immigrants in the EU: regularization and deportation. While the EU as a whole has no competence to deal with regularization, individual member states have recurrently used regularization processes as a means of dealing with the problem. ‘ Regularizations‘ are special programs which offer migrants in an irregular administrative situation the possibility to obtain a legal residence and work status upon fulfilling a certain set of conditions, such as having a job offer, a clean criminal record and a history of residence in that member state. Regularizations programs are crucial, as they have been the most important means for achieving legal status in Southern Europe although they have not been so central in Northern and Central Europe. There are some member states which have expressed reservations about regularization programs (such as Austria, France, Germany and Belgium), as they consider them to constitute a pull-factor for future irregular immigration .

However, the abandonment of regularization processes would certainly increase the extent of informal employment and the size of the informal sector, considering that there is a mismatch between efficient channels for regular immigration and the needs of workers in some sectors such as agriculture, construction or domestic help. The European Commission has indeed stated on numerous occasions that these regular channels should be made available for labor migrants. This mismatch has been clearly revealed in Italy, where despite strong rhetoric against irregular migrants, the government had to launch a regularization procedure in 2009 through which 300,000 housemaids and caretakers asked for a residence permit. The final number of permits granted is still not known.

In fact, between 1996 and 2008 there were 43 regularization programs implemented in 17 of the 27 EU member states. At least 3.2 million irregular migrants obtained legal status as a result of these programs. During negotiations for the adoption of the European Pact on Immigration and Asylum undertaken when France held the EU presidency, a proposal to ban regularizations at the European level was brought up. This was finally not adopted due to the opposition of the Spanish government. The new 2009 EU multiannual program in the area of Justice and Home Affairs for the years 2010-2014, known as the Stockholm program, only refers to the need to improve the exchange of information on regularizations at the national level.

EU policies

The EU only obtained a clear-cut competence to regulate immigration issues in 1999 with the entry into force of the Amsterdam Treaty. Since its inception, addressing irregular immigration, including the repatriation of undocumented migrants, has formed a central part of the EU’s common immigration policy. The EU always advocated the idea that an effective return policy was vital to ensur­ing public support for phenomena such as legal migration and asylum. It was understood that third-country nationals who did not have a legal status enabling them to stay in the EU, either on a temporary or permanent basis, should leave. A credible threat of forced return, the commission argued, would send a clear message to potential irregular migrants that irregular entry into the EU would not lead to a stable form of residence.

With that background in mind the EU adopted a variety of legal instruments in relation to irregular immi­gration in the past decade. Among them, the Council Directive 2001/40 on mutual recognition of decisions on the expulsion of third-country nationals , Council Directive 2003/110 on assistance in cases of transit for the purposes of removal by air , and the 2004 Directive which defines the conditions for granting residence permits of limited duration to third-country nationals who are victims of trafficking in human beings and who cooperate with authorities . In 2010, however, the European Commission produced a report on the implementation of this last directive in which it stated that the directive’s impact had been insufficient in light of the reduced number of residence permits granted under it.

These instruments, however, were not comprehensive enough and did not take into account all the elements present in the repatriation of a migrant, such as removal, detention or the possibility of prohibiting re-entry. To that end, in 2008 the EU adopted, after a long and arduous negotiation process, Directive 2008/115 on common standards and procedures in member states for returning illegally staying third-country nationals, known as the Returns Directive. The 24 member states bound by the directive (the UK, Ireland and Denmark are not subject to its application) should have implemented it by 24 December 2010, although most of them have yet to completely integrate it into national legislation.

The Returns Directive is considered to be the most contentious piece of legislation ever adopted by the EU in the area of immigration. Among its more controversial provisions is the possibility of detaining a migrant for a period up to 18 months, the possibility of a re-entry ban into the EU for a period of five years and the chance to detain and return unaccompanied minors. These provisions, among others, provoked much criticism from international organizations, such as the Council of Europe, and from Latin American countries in particular, a major source of immigrants to the EU.

A year later the EU adopted the directive providing for minimum standards on sanctions and measures against employers of illegally staying third-country nationals . The rationale for this legal measure is that one of the elements that encourages irregular immigration is the possibility of finding work . Hence, the objective of the directive is to forbid the employment of irregular migrants by sanctioning employers who infringe that prohibition. This directive has also been criticized because the EU has not taken into account the fact that irregular immigration is very much linked with the rigidity of national immigration laws . Member states are however set to implement this directive by 20 July 2011.

Looking forward

Irregular migration, a profoundly complex challenge, needs to be tackled through a variety of means, including legal immigration channels . Moreover, EU member states should put in place the necessary resources to deal with the problem: The efficient and timely issuance of residence permits or renewals is key, for example, as it ensures that third-country nationals do not fall into an ‘ irregular situation‘.

Finally, when an irregular migrant cannot be expelled, for whatever reason, member states should make use of the possibility provided by Article 6 of the Returns Directive of granting them an autonomous residence permit or other authorization offering a right to stay for compassionate, humanitarian or other reasons. The European Commission and the Court of Justice will continue to monitor the situation and should pay special attention to the incorrect or incomplete implementation of these key EU measures.


Dr Diego Acosta is a Lecturer in Law at the University of Sheffield. His publications include “The Long-term Residence Status as a Subsidiary Form of EU Citizenship. An Analysis of Directive 2003/109”, Martinus Nijhoff Publishers: Leiden, 2011.


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