Gambling inspections to step up with new Ukraine AML law
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Ukraine’s new law outlining procedures for organisations subject to anti-money laundering and counter terrorist financing (AML/ CTF) risk has gone into effect, meaning that operators in the country will face enhanced inspections.
The new law outlines the circumstances in which a gambling operator in Ukraine may face either a scheduled or unscheduled inspection of their premises.
Broadly, there are four principal reasons that the authorities in the Eastern European country may decide to inspect a gambling operator. These are:
- To clarify the exact nature of a gambling operator’s operations
- To identify financial risks
- To assess the state of an operator’s risk management system
- To check the operator’s compliance with Ukrainian legislation
Under the rules, the frequency of the inspections is to be set depending on the operator’s level of exposure to AML/ CTF risks.
The planned inspection schedule will be approved by the country’s gambling regulator, KRAIL. The timetable is to be published no less than 10 working days before the quarter in which the inspections are to occur.
The legislation states the situations in which KRAIL might decide to engage in an unplanned inspection of an operator’s offices and equipment.
The regulator can conduct an inspection if an operator shows signs of violating the requirements of current legislation. The regulator may also take this step as part of the execution of a court ruling.
KRAIL could additionally opt to inspect an operator without warning if it comes across new documents not known at the time of the planned inspection.
An unplanned inspection can also legally happen if an operator fails to submit documents within the requested period or provides a written explanation as to why it has not done so.
Another situation in which an unplanned inspection might occur is if KRAIL believes that a gambling business has forged documents.
Operators face increased scrutiny
Following the invasion of Ukraine by armed forces of the Russian Federation in February 2022, gambling operators in the country have faced increased scrutiny from government.
The country has acted severely against operators considered to be offering their services either in Russia or Russian occupied Ukrainian territory.
Last year, the continued operation of Russian-linked 1xbet became a major scandal in Ukraine, with KRAIL facing criticism for its failure to act more swiftly against the operator.
In August 2022, president Volodomyr Zelensky eventually personally intervened to sanction the operator after a petition demanding its ban received over 26,000 signatures.
In March 2023, Parimatch suspended its Ukrainian operations after being sanctioned by the Ukrainian government.
This happened after the operator was sanctioned alongside 287 companies, many being gambling businesses, due to conducting business in Russia or Russian occupied territory, a charge which Parimatch strenuously denies.
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