Anti-money laundering in gaming expert chats ahead of Canadian Gaming Summit.
When it comes to the financial integrity nuances of the Canadian gaming industry, Derek Ramm is perhaps uniquely well-placed to provide expertise.
Ramm is a former lead officer at the Government of Canada’s financial intelligence unit FINTRAC, before serving as the director of anti-money laundering (AML) for firstly Ontario Lottery and Gaming (OLG) and subsequently the Alcohol and Gaming Commission of Ontario (AGCO). He now works as the global head of advisory services for AML risk management technology firm Kinectify.
Ramm will be providing his insights at the Canadian Gaming Summit in Toronto from June 17-19. In the lead-up to the Summit, Canadian Gaming Business spoke to him about recent developments in Canadian gaming and what he’s looking forward to sinking his teeth into at CGS.
CGB: Anti-money laundering has always been a serious consideration when it comes to land-based casinos. How has the proliferation of online and omnichannel gambling changed the landscape?
Ramm: Based on my experience, the primary threat for land-based casinos is the placement of illicit cash into the system. While cash is not necessarily a consideration for online gaming, there are a number of common risk factors with both delivery channels. These include red flags such as players engaging in minimal gaming activity, or who have questionable sources of funds.
In the end, it’s important for gaming organizations to understand the nature of the risks they face and ensure they have appropriate player and transaction monitoring controls and systems in place.
CGB: Some industry stakeholders argue that FINTRAC’s reporting process and requirements are outdated at best and inadequate at worst. What needs to be done to strengthen these processes and make things easier for gambling operators?
Ramm: There needs to be a holistic review of how federal anti-money laundering regulations apply to Canada’s gaming industry. First, the definition of “casino” is quite narrow and doesn’t cover many forms of regulated gambling activity, so you don’t have a level playing field within the industry. There are also questions as to whether it makes sense for the “conduct and manage” agency to be ultimately accountable for anti-money laundering compliance, since most provinces have a private-sector delivery model and aren’t involved in day-to-day gaming operations except where “conduct and manage” responsibilities are necessary.
Another example is the Casino Disbursement Report, which requires gaming organizations to report payouts to players of $10,000 or more in any form (cash, cheque, funds transfer, etc.) This report was created in 2009, prior to the existence of legal online gaming in Canada. Casino Disbursement Reports now account for upwards of 90% of all reports filed by online operators. I would question the report’s overall utility, particularly in the online gaming space, since the original intent was to see the in-and-out flow of large money transactions at land-based casinos.
The Canadian Gaming Association has an anti-money laundering working group that is examining these issues and has made submissions to the federal government. I also know that several provinces are aligned in the view that anti-money laundering regulations need to recognize how Canada’s gaming industry has evolved, and continues to evolve.
CGB: iGaming Ontario told us it is working on its own automated system for filing suspicious transaction reports. How important is such a measure?
Ramm: It’s great that iGO continues to pursue a solution, but it’s been over three years since the market opened. The bottom line is that technology is indispensable, especially for a market the size of Ontario, where the latest figures show over $63 billion in annual wagers.
In the past year, we’ve seen numerous regulatory and criminal penalties levied against gaming operators for AML violations in the United States. Here in Canada, FINTRAC has taken a much more aggressive, enforcement-orientated posture toward the gaming industry. A lot of these sanctions have involved failures to effectively monitor activity or use all available information to assess risk. Manual processes are completely inadequate to deal with the volume of transactions and player data that must be scrutinized for suspicious activity. Not only is there substantial regulatory risk with manual processes, but the administrative burden on operators has created completely unnecessary financial costs.
CGB: With the launch of Alberta on the horizon, what conversations are people having about how to simplify and streamline AML procedures across the two provinces?
Ramm: First, I would say that, overall, Ontario is a terrific success story in how to launch a regulated online gaming market. There are a lot of things that Ontario did right but there are also a lot of lessons that Alberta (and other provinces) can learn from some of the missteps that I think were made. Further to my earlier point about the need for technology, the “minimum viable product” for things like anti-money laundering compliance and centralized self-exclusions will only suffice for a very short period after market launch without a clear roadmap to automation. In fact, Alberta would be wise to have technology solutions already in place when their market opens. Minister Dale Nally and his team have been very engaged with industry on this front, and there have been some productive conversations.
CGB: How can industry stakeholders work together to combat money laundering and ensure a safer and more secure industry?
Ramm: The best advice I can give, after more than two decades of experience in this field, is that communication is paramount. The various stakeholders – operators, crown corporations, regulators, FINTRAC and law enforcement – need to have honest conversations with each other about the threats the industry faces and the best approach to dealing with them. I think operators and crown agencies genuinely don’t want bad actors as customers (it’s not good for the industry or society as a whole) so that should be the starting point for any discussion.
CGB: Other than AML and other compliance issues on the agenda, what are some topics you’re looking forward to hearing more about at Canadian Gaming Summit?
Ramm: There are a lot of great sessions at the Summit. I’m looking forward to hearing about the latest developments in player protection and responsible gaming, as well as some of the topical conversations surrounding issues such as liquidity or new forms of gaming.
