According to Article 11 of the OAML-FDJP, which refers to Article 6(2) of the AMLA, Swiss lottery and sports betting operators are committed to initiating EDD processes that serve to clarify the economic background of the business relationship or transaction:
- when faced with a high-risk business relationship or transaction as outlined in the previous chapter;
- when the transaction or the business relationship appears unusual, unless its legality is clear;
- when there are indications that assets are the proceeds of a felony8 or an aggravated tax misdemeanour under Article 305bis(1bis) of the Swiss Criminal Code (SCC, RS 311.0) or are subject to the power of disposal of a criminal or terrorist organization (Article 260ter SCC) or serve the financing of terrorism (Article 260quinquies(1) SCC);
- when the data on a player or a BO in a business relationship or transaction is identical or very similar to the data passed on to the financial intermediary by GESPA.
What must be clarified when an EDD process is initiated depends largely on the risk presented by the business relationship or transaction. The most common measures to determine if the economic background is legitimate, in accordance with Article 18 and Article 19 of the OAML-FDJP, can be summarized as follows:
- The BO will be identified or re-identified:
- if not already done;
- where the operator has doubts that the real BO is the one declared by the player;
- if identification occurred some time ago and the operator has internal policies stating that identification shall be repeated after a determined period of time, which can depend on the risk presented by the business relationship.
- In some cases, if the player is not the declared BO and the economic link between the player and the BO is weak, the player will have to submit more precise written/oral clarifications or some corroborating documents.
- The Source of Funds (SoF) will be clarified and the origin of the money used by the player for financing their wagers explained. For the purposes of SoF clarification, typical questions include: where does the money come from for a particular transaction or set of transactions or for financing the entire business relationship? How and where did the player come by that money?
In the case of online games, where the money circulates through payment method providers from payment apps, credit and debit cards linked to bank accounts and is not directly credited to the player’s online account from a classic wire transfer9 revealing details of the ordering party. Operators are accustomed to asking players more questions regarding the SoF, since the SoF is defined as the origin of the money used for playing – something that is difficult to determine. Players must therefore state if the money used for the wagers originates from: their revenues and earnings, social or pension payments, interest from personal savings, returns on investments, money from property sales, inheritance and gifts, or legitimately won money, such as that received from casinos or lottery and sports betting operators. To better understand the economic background of the player, questions about the employment status, commercial or professional activity and the amount of revenues are always asked.
In the case of offline games, the SoF remains completely unknown since the player places wagers at points of sale. In this case, as for online accounts, the operator asks players submitted to EDD measures to declare their SoF. The player will then answer the same questions asked to online players.
SoF questions are put to the player who is the contracting party with the operator, but they concern all BOs of the business relationship. Answers to SoF questions can be collected orally or in writing. - The Source of Wealth (SoW) will be determined. To clarify how players have accumulated wealth over time, typical questions asked of the player include: what is the total wealth of the player? How did the player and/or BO accumulate the wealth over time? What does their wealth consist of (e.g. savings from earnings, investments, real estate, inheritance and gifts, winnings from casinos and operators). SoW information can be collected orally or in writing.
- Public sources and databases, like Zefix (the main database for Swiss companies registered for commercial purposes) and Google will be consulted (these kinds of searches facilitate the detection of potential negative information on the players and/or BOs, but they can also serve to confirm statements made by the players e.g. as to their professional activity).
- Trustworthy private individuals could be consulted, like point of sales staff for offline games.
According to Article 18(2)(a) of the OAML-FDJP, the operator facing a high-risk relationship or transaction must proceed to simplified EDD measures, consisting of the identification of the BO, if it knows that the player has wagered a maximum of only CHF 10,000 over a period of 365 days, or where there is no evidence to suggest it. This can be easily determined for online games, since the operator has an overall picture of transactions occurring on the player’s online account, but hard to ascertain when the player plays offline, since winnings under a certain amount can be directly paid out by points of sale and are not associated with a specified player.
If players’ declarations are plausible and in line with their online account and/or offline transactions, no further details are asked of the player. If not, players could be invited to back up their assertions with evidence, such as salary statements, bank account statements, etc. or provide information in person at the operator’s headquarters.
If EDD measures do not allow the operator to mitigate the risk that the money waged by players comes from an illegitimate source, if players cannot back up their statements with evidence or do not want to collaborate with the operator to make clear the economic background of the transaction or business relationship, the operator has the right to terminate the business relationship. This has the consequence that for a certain period, and as long as the economic background of the business relationship is deemed implausible by the operator, the player will not be able to open an online account with the operator or claim offline winnings.
If EDD measures reveal signs of money laundering, terrorist financing or other offences linked to money laundering, or cannot eliminate the suspicion that the wagered money comes from illegitimate sources, the operator may have to file a report with the MROS under Article 9 of the AMLA (duty to report) or Article 305ter(2) of the Swiss Criminal Code (right to report). If a report is filed and sent to the MROS, the operator will have to wait a maximum of 40 days before terminating the business relationship with the player. During this period, the MROS will conduct its own investigations and will then decide to forward the report to the competent prosecution authority. In the latter case, the operator will be informed and, pursuant to Article 10(1) of the AMLA, must freeze the assets (claimed winnings and/or assets in the player’s online account) that are related to the report. The freezing of assets lasts until the response from the prosecution authority, but at most, for five working days from the date on which MROS gives notice to the operator that it has transmitted the reported information (Article 10(2) AMLA).
8 Felony is described within the meaning of Article 10(2) SCC (i.e., an offence punishable by a custodial sentence of more than three years). Typical economic offences, which are examples of felonies within the above-mentioned meaning are misappropriation, theft, fraud, aggravated criminal mismanagement, bankruptcy and debt collection felonies, participation or support to a criminal or terrorist organization, active and passive bribery of Swiss or foreign public officials.
9 For the time being, players’ online accounts cannot be funded by cash deposits or wire transfers from bank accounts, as they are not accepted by lottery and sports betting operators, even though they are not prohibited by law.