How is money laundering and terrorism financing defined?

Money laundering entails that a person:

• Receives or obtains on part of themselves or others a share in the financial proceeds of a criminal act
• Hides, stores, transports, helps to transfer or in another manner assists in securing the financial proceeds of a criminal act

Terrorism financing entails that a person:

• Directly or indirectly contributes with financial support to, raise or collect funds to or make financial services available for persons, groups, or organisations that commit or have intentions ofto committing acts of terror

Obliged entities 

The Danish AML Act covers persons and legal entities that commercially provide gambling in Denmark with a licence. The Act also covers persons and legal entities that are established in Denmark and commercially provide gambling in other countries.

The Act covers all gambling products as a rule, but the Minister for Taxation can exempt the offer of particular gambling products from the legislative requirements partly or entirely if the gambling product is assessed to constitute a low risk of being exploited in connection with money laundering. That possibility has been utilized, so that the Act covers gambling operators that offer:

• Online betting
• Land-based betting
• Online casino
• Land-based casino

Partially exempted gambling products

The Minister for Taxation has partially exempted the following gambling products from the AML Act’s requirements:

• Lotteries
• Class lotteries
• Charity lotteries
• Local pool betting
• Gaming machines in arcades and restaurants
• Fantasy sports (not daily)
• Competitions where participation requires the sending of text messages or similar
• Gambling in accordance with sections 9 to 15 of the executive order on public amusements
• Online bingo offered through television

Please notice that operators of the above games are still subject to some provisions of the Anti-Money Laundering Act. If gambling operators in connection with their provision of gambling become aware of or suspect money laundering or financing of terrorism, gambling operators are obligated to: 

• Notify the Money Laundering Secretariat 
• If possible, avoid completing transactions if the operator suspects, becomes aware of or has reason to believe that the transaction concerns money laundering or financing of terrorism. 
• Protect employees who makes an internal or external notification about suspicions of money laundering or financing of terrorism. 
• Comply with the rules on the duty of confidentiality of the Anti-Money Laundering Act.

What must a gambling operator do?

Gambling operators play, like other obliged entities according to the Act, an important role in preventing money laundering and terrorism financing  since they are prerequisite for ensuring that the risk of detection is real.
The AML Act requires that the gambling operator meet several obligations. They are specified, in short, in the following.

The gambling operator must identify and assess the risk of being abused for purposes of money laundering or financing of terrorism. The gambling operator must base their procedures on the risks that apply to their specific business model. This means that the gambling operator must prepare a risk assessment of all parts of their provision of gambling activities in relation to money laundering. The risk assessment is a prerequisite for the Danish Gambling Authority to consider the gambling operator's procedures sufficient.  

The gambling operator must have sufficient policies, procedures, and controls, which describe the operator's procedures in relation to the identification of suspicious behavior and transactions.The procedures must be operational and thereby be directly useful to relevant employees. 

The procedure must at a minimum manage:

• Risk management
• KYC procedures
• Investigation, recording of findings, and reporting requirements
• Storing of records, transactions etc.
• Screening of employees and efficient controls for the prevention of money laundering and  terrorism financing 
• Data protection in relation to money laundering

The gambling operator must ensure that the management and (new) employees are instructed in the requirements of the AML Act. The gambling operator must ensure that the management and employees actually participate in the instruction and that they obtain sufficient knowledge in relation to their tasks. The instruction must be repeated and updated regularly, for example in instances where the risk assessment and procedures are updated. 

The gambling operator must know their customers and the customer's purpose with the business relation. This is called KYC procedures. It is important to ensure that the customer's purpose is not money laundering. The gambling operator must implement the procedures when the player is registered as a customer. For example when creating an account, issuing a loyalty card, month pass or annual pass. In addition to this, they must be implemented at other times as well, among other things, when the customer's relevant circumstances change. In a situation, where games are entered without a regular customer relationship, the procedures must be implemented when the stake or payment of winnings are of at least 2,000 euros, or when there is a suspicion about money laundering or financing of terrorism. 

The gambling operator must investigate the background for and the purpose of all transaction that are:

• Complex
• Unusually large
• Made in an unusual pattern
• Does not have an obvious financial or legal purpose

In addition to this, it may be relevant to expand the supervision of the customer to determine whether the transactions are suspicious. 

The gambling operator must record information about the customer, transaction or the activity and the conclusion of the investigation. The obligation to record findings covers both cases that lead to a notification to the National Unit for Special Crime, (NSK) and cases that do not result in a notification. 

The gambling operator must keep records of the information gathered in relation to 

• KYC procedures
• Documentation for and registrations of transactions made as a part of a business relation or a single transaction
• Documents and registrations of completed investigations

The gambling operator must notify the Anti Money Laundering Secretariat at the National Unit for Special Crime, (NSK) if the gambling operator becomes aware or suspicious of or have reason to suspect that (a) 

• transaction
• financial means
• acitivity

has or have had relation to money laundering or financing of terrorism. The notification must take place immediately and digitally. The Anti Money Laundering Secretariat will assess whether the notification must be further investigated. 

If the transaction has not already been completed, the gambling operator must refrain from completing the transaction until a notification to the Anti Money Laundering Secretariat has been made. If the gambling operator cannot refrain from completing the transaction or if the gambling operator assesses that an ommission will harm the investigation, the notification must be made immediately after the completion. 

For more information about the gambling operator's obligations, please read the Danish Gambling Authority's guidance on preventive measures against money laundering of criminal proceeds and financing of terrorism. 

Land-based betting

Note that if e.g. a kiosk or super market provide betting products on behalf of a gambling operator, the retailer is not an obliged entity according to the Act. This means, in practical terms, that it is the gambling operator, who can be subject to penalties if the retailer does not perform the required actions. The operator is obligated to instruct retailers about the required actions. 

Depending on the business model of the operators the retailer and all staff who is selling betting products must e.g.  know:

• When KYC must be performed
• How KYC must be performed, including relevant levels
• What is considered a suspicious transaction or behavior
• What constitutes a connected transactions 
• How to pass on KYC documentation and basis for suspicion to the obliged entity
• Proper handling of personal data e.g. in connection with KYC

The gambling operator must make sure that the retailer and the employees thereof are capable of performing the duty of preventing money laundering in an sufficient manner. Therefore, the gambling operator is obligated to continuously ensure that the retailer and the employees thereof e.g. perform KYC and pass on information about suspicions relating to money laundering to the gambling operator.

Inspection and responses

Read more about the Danish Gambling Authority's inspection and reponses under the AML Act.

Guidances

Legislation

Want to know more?

Money Laundering in Denmark - the national risk assessment of money laundering 2022

The national risk assessment of financing of terrorism 2024

The EU commission's site about anti-money laundering and financing of terrorism (including the supranational risk assessment)

The supranational risk assessment 2022

Annex for the supranational risk assessment 2022

The Danish Financial Supervisory Authority's Anti-Money Laundering Guide (in Danish Only)

The Danish Financial Supervisory Authority's registry of Danish politically exposed persons (PEP-list, in Danish only)

The Danish Business Authority's webpage about sanctions (in Danish only)

Hvidvask.dk - the Danish FIU

The 4th Anti-Money Laundering directive

The 5th Anti-Money Laundering directive

Financial Action Task Force's (FATF) website

Below you will find FATF's guides: 

FATF Guidance on the Risk-Based Approach for Casinos

Vulnerabilities of Casinos and Gaming Sector

Risk-Based Approach to Prepaid cards, mobile payments and internet-based payment services

FATF's guide on politically exposed persons