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Casino highlighted as money laundering risk in EU report

Moneyval said that during the on-site visit, it became clear to the assessment team that compliance by the casino had weaknesses

The council of Europe’s anti-money laundering watchdog Moneyval identified a relatively new risk in Cyprus with the expansion of the Cyprus Casinos operation, which opened its first casino in Limassol in 2018.

The report on money laundering risks in Cyprus which was published on Wednesday appeared to be suggesting that Cyprus consider not permitting the casino to expand until it can “responsibly manage” the risk associated with its current configuration. The Limassol integrated casino and resort is due to open at the end of 2021.

Additionally, Moneyval said the licensed casino operator intended to introduce junket services. This is when a casino reaches out to wealthy gamblers and attracts them to their establishment with luxury promotions.

“The enlargement… will undoubtedly increase the ML (money laundering) and TF (terrorist financing) risks and require a number of further mitigation measures. For this reason, the casino was weighted fourth in terms of materiality,” Moneyval said.

It said that during the on-site visit, it became clear to the assessment team that compliance by the casino had weaknesses, and given that it was planning aggressive expansion, including significantly increasing the size of the gaming operations, attracting foreign VIP customers, the assessment team deemed it necessary to focus on and weight more heavily the implementation of requirements by the casino.

“The casino is currently operating at or beyond the limits of its ML/TF compliance and risk management system,” Moneyval said.

“Cyprus should consider whether the casino can responsibly manage the ML/TF risk associated with its current configuration, and if not then whether the current configuration should be changed in ways that provide more certainty about effectiveness, such as to a membership model. In any event, until the casino can demonstrate an effective… programme at its current level of activity, Cyprus should consider not permitting it to expand that activity,” it added.

The Moneyval report said an action plan prepared by an outside consultant, which is nearing completion, would identify mitigating steps that are needed to address current deficiencies, “but it is unclear whether the plan is intended to identify steps that will need to be taken to accommodate anticipated growth”, it added.

It also said the casino’s employees appear to understand the qualitative risks associated with the casino’s services – in particular the risks associated with a highly cash-intensive business involving patrons with little desire or incentive to disclose information about their identities, business, or other facts that allow for more nuanced evaluation of risk.

“However, the casino’s employees appear to not fully appreciate the quantitative magnitude of those risks when attached to operations of the casino’s current size – much less its anticipated future size.”

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