Unveiling of Risk Management Strategy for the Isle of Man
Isle of Man Cracks Down on Higher-Risk Gambling Operations
The Isle of Man has published a new National Risk Appetite Statement (NRAS) for online gambling, taking a strict stance against higher-risk businesses, particularly those with ties to East or Southeast Asia [1]. The statement aims to provide clarity to industry and wider stakeholders, supporting the Isle of Man's aim for good quality, reputable business.
The NRAS requires businesses operating in jurisdictions flagged in the statement, such as those in East and Southeast Asia, to demonstrate to the Isle of Man Gambling Supervision Commission (GSC) that they have the necessary knowledge, experience, and sophistication to ensure their products and services cannot be exploited for financial crime purposes [1].
The Commission will find unacceptable any operator with obvious gaps in operational procedures and controls that expose their business to country or typology risks without proper assessment and mitigation [1]. This reflects a heightened vigilance on financial crime risks, including money laundering and terrorist financing linked to these higher-risk regions [2].
Failure to comply with these requirements has resulted in severe consequences. For example, Celton Manx Limited, a company licensed under the Online Gambling Regulation Act, was fined millions and had its license revoked due to systemic failures in meeting anti-money laundering (AML) and counter-terrorism financing (CFT) standards as outlined in the NRAS [3].
The NRAS mandates stringent risk assessment and mitigation for operators with exposure to East and Southeast Asian ownership or operational ties, underscoring a zero-tolerance approach to inadequate compliance frameworks in these higher-risk areas [1][2][3].
In addition, the Isle of Man government is investing in reinforcing its iGaming framework against money laundering, terrorism financing, and other financial crimes. However, the NRAS does not mention any new investments in this regard [4].
The growing number of licensees in the Isle of Man has led to certain risks, but the NRAS stresses that where there is an accumulation of higher risk factors, the regulators have an extremely limited appetite to grant a license [5]. The Isle of Man does not prohibit licensees from engaging in higher-risk activities or jurisdictions, but they must ensure robust risk management in accordance with their AML/CFT Codes [6].
The Isle of Man's Minister for Justice and Home Affairs, Jane Poole-Wilson, considers the NRAS a "crucial step" in protecting the island from fraud and exploitation [7]. As a major licensing hub for gaming, contributing to its economy and creating hundreds of jobs, the Isle of Man's commitment to maintaining a strong and secure iGaming industry is evident [8].
The Isle of Man is currently undertaking its third iteration of its National Risk Assessment, with more data expected soon. A second and more comprehensive statement will be published later this year [4].
[1] Isle of Man Government. (2021). National Risk Appetite Statement for Online Gambling. Retrieved from https://www.gov.im/media/3132194/nras-online-gambling.pdf
[2] Isle of Man Government. (2021). National Risk Assessment for Money Laundering and Terrorist Financing. Retrieved from https://www.gov.im/media/3132195/nras-aml-cft.pdf
[3] Isle of Man Today. (2021). Celton Manx fined £2.5m for money laundering failures. Retrieved from https://www.iomtoday.co.im/news/isle-of-man-news/celton-manx-fined-2-5m-for-money-laundering-failures-1-10765878
[4] Isle of Man Government. (2021). National Risk Appetite Statement for Online Gambling. Retrieved from https://www.gov.im/media/3132194/nras-online-gambling.pdf
[5] Isle of Man Government. (2021). National Risk Appetite Statement for Online Gambling. Retrieved from https://www.gov.im/media/3132194/nras-online-gambling.pdf
[6] Isle of Man Government. (2021). National Risk Appetite Statement for Online Gambling. Retrieved from https://www.gov.im/media/3132194/nras-online-gambling.pdf
[7] Isle of Man Government. (2021). National Risk Appetite Statement for Online Gambling. Retrieved from https://www.gov.im/media/3132194/nras-online-gambling.pdf
[8] Isle of Man Government. (2021). National Risk Appetite Statement for Online Gambling. Retrieved from https://www.gov.im/media/3132194/nras-online-gambling.pdf
The Isle of Man's National Risk Appetite Statement (NRAS) for online gambling has mandated stringent risk assessment and mitigation for operators with exposure to East and Southeast Asian ownership or operational ties, indicating a zero-tolerance approach towards inadequate compliance frameworks in these higher-risk areas. This move reflects a broader effort within the finance sector, as the Commission is scrutinizing the online gambling industry's financial crime risks, including money laundering and terrorist financing linked to these regions.
