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Gaming deposits and withdrawals are a hot topic in Italy where most of payments still occur in cash, but can they be processed through shops? What are the restrictions?
Updated on 3 April 2017
We are receiving a considerable number of requests of advice by online gaming operators that want to rely on a land based network of shops (the so called “PVR”) not only to advertise their business, but also to process deposits and withdrawals. This is a problem especially in a country like Italy where the vast majority of payments are still performed in cash and players do not trust online sites. And, because of such scenario, Italy is the country where pre-paid cards for instance have become very popular, unlike what experienced in other jurisdictions.
No major problems with gaming deposits?
Regulations allow the performance of deposits by means of scratch cards/vouchers (carte di ricarica) or other anonymous payment means sold at shops. This is a consolidated practice for the transfer of credit to mobile phones for instance and became very popular also in the gambling sector.
However, the problem arises when funds are transferred through a master account held for instance by the shop owner since this might lead to issues as to the traceability of the transaction. And indeed traceability issues are also the reason why regulations refer to the top up cards that are on some kind of “material” support which can now be replaced by mere transaction identification codes of the immaterial vouchers.
But to avoid potential anti-money laundering issues, regulations prevented the usage of scratch cards, vouchers and other anonymous payment means up to the time when players are identified through the collection of their ID.
Will anything change with the 4th AML Directive?
According to the current draft of the law implementing the 4th AML Directive in Italy payments to online gaming operators need to be traceable. Depending on how the provision will be interpreted, this means that vouchers, scratch cards and other anonymous payment means might be prohibited even if the player provided the copy of his ID.
In order to fill this gap and still be able to collect money in cash through shops, operators might have to either use a payment institution or an e-money issuer through a pre-paid card. And this is indeed the solution pursued by some major gambling operators that were able to create a very successful payment business.
But what about withdrawals?
The main issue arises when it comes to the processing of withdrawals through PVRs. Online gaming regulations do not provide for an express prohibition of processing of withdrawals by means of a land based network. However, the issue is whether such conduct is compliant with financial services laws and criminal laws on gaming intermediation.
The matter has been handled in a different manner by operators based on the mere reference to PVRs in the so called protocols of communication that however are mere technical requirements. And a recent more liberal approach informally accepted by the gaming regulator has strenghtened such practice which however presents considerable risks.
At the same time, it is becoming exponentially popular the safer option to rely either on an e-money issuer that provides a branded pre-paid card or set up a payment institution.
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