On July 12, 2024, the Brazilian Ministry of Finance’s Secretariat of Prizes and Betting issued Ordinance No. 1,143, setting new regulations for fixed-odds betting operators to prevent money laundering, terrorism financing, and the proliferation of weapons of mass destruction (AML/FTP). These rules mandate that all betting operators in Brazil must implement stringent internal controls and risk assessment matrices for gamblers, betting operators, and their employees, accounting for the volume of funds in both virtual and real-world betting.
Key Requirements for Compliance
The ordinance outlines several critical procedures that operators must adopt to ensure compliance:
- Identity Verification: Operators must verify and validate the identities of gamblers and platform users during registration. This includes:
- Collecting necessary registration data as specified by the Secretariat of Prizes and Betting.
- Determining whether a gambler or platform user is a politically exposed person (PEP).
- Assessing the compatibility between a gambler’s financial capacity and their betting activities.
- Monitoring and Reporting: Operators are required to monitor, select, and analyze bets and transactions to identify potential money laundering or related offenses. Any suspicious activities must be reported to the Financial Activities Control Council (COAF).
- Record Keeping: Operators must maintain updated records and documents, which must be validated and stored for a minimum of five years.
Although the ordinance took effect immediately upon publication, the Secretariat of Prizes and Betting will start inspecting, monitoring, and penalizing non-compliance from January 1, 2025. The Ministry of Finance has indicated that six additional ordinances will be published by the end of July to further regulate Brazil’s fixed-odds betting market.
Challenges and Compliance Timeline
All betting operators seeking a license in Brazil must comply with the new AML rules by the end of 2024. The ordinance is part of Brazil’s comprehensive four-stage regulatory process aimed at finalizing regulations for the betting and gaming industry. The first stage, which was published in May, covered technical, payment, and security requirements. The current AML ordinance represents the second key development, with additional regulations on technical and security standards for online gaming and advertising monitoring expected soon.
The process, however, is slightly behind schedule. The Ministry of Finance originally planned to release the AML rules in May, but they were delayed until July. Operators must secure their licenses by the end of 2024 to avoid penalties starting January 1, 2025.
Implications for the Industry
The introduction of these AML rules is crucial as Brazil prepares to fully regulate its betting and gaming market. Currently, only two groups, Superbet and Betano, have applied for licenses. The high compliance costs and stringent regulations might be deterring other operators from entering the market. However, industry experts anticipate a surge in applications once all regulations are clarified.
Authorized operators will be granted a five-year license upon payment of a BRL30 million fee. These operators will be able to offer gambling services through three skins. The clarity provided by the new regulations is expected to attract more operators to the Brazilian market, ensuring a more structured and secure betting environment.
Brazil’s new AML regulations for fixed-odds betting operators mark a significant step towards a fully regulated betting market. By enforcing stringent compliance measures, Brazil aims to combat money laundering and other related crimes effectively. As the industry adapts to these changes, the expectation is for a more transparent and secure betting landscape, benefiting both operators and players.
Source:
Empresas interessadas em obter autorização para explorar apostas de quota fixa devem seguir regras de combate à lavagem de dinheiro, gov.br, July 12, 2024.
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