The gambling industry in Estonia operates under strict regulations, particularly when it comes to providing additional services beyond gambling. Here, we address key questions regarding the limitations imposed on Estonian B2C licensed gambling operators and what they need to know about compliance and regulatory audits.
The team at Advennt spoke with Njord Law Firm to know more.
Q: Can an Estonian B2C licensed operator provide support services, such as payment processing, to its non-Estonian group companies?
Unfortunately, a licensed Estonian B2C gambling operator is not permitted to provide support services to its (non-)Estonian group companies, such as payment processing or any other activities. Under § 9 (2) of the Gambling Act (GA), the organisation of gambling must be the only field of activity of a gambling operator. This restriction applies regardless of whether the Estonian-licensed operator is an Estonian entity or a foreign entity, including those from outside the EU and the EEA.
That said, it is common for gambling operators to establish separate sister companies to provide services to licensed operators. For instance, if a Cyprus-registered operator holds an Estonian gambling license but wants to offer payment services to other licensed gambling operators, it would need to use a separate entity for that purpose.
In summary, although the GA prohibits gambling operators from offering services beyond gambling itself, it does not prohibit outsourcing necessary services – such as payment processing to other companies, including within the same group of companies.
Q: How do supervisory audits work for gambling operators in Estonia?
Financial audits in Estonia follow general EU rules. For Estonian registered legal entities that hold a gambling operator license in Estonia, the requirement for a financial audit arises when the operator exceeds certain thresholds (e.g., employee count, revenue) within a financial year. For foreign registered legal entities that hold a gambling operator license in Estonia, the expectation is that the financial reports are audited regardless of meeting any thresholds.
However, gambling-specific audits for supervisory purposes are only conducted ad hoc, which means they are usually triggered by a customer complaint or other grounds for suspicion.
These audits typically focus on:
- Responsible Gambling (RG) Compliance: Ensuring adherence to self-exclusion lists and age verification
- AML (Anti-Money Laundering) & CTF (Counter-Terrorist Financing) Compliance: Investigating financial transactions and risk management practices
- HAMPI List Compliance: Verifying compliance with Estonia’s national gambling self-exclusion register
Q: What changes are expected in AML supervision for gambling operators?
There has been a shift in supervisory practice, particularly from the Financial Intelligence Unit (the “FIU”), which oversees compliance with AML/CFT regulations. The FIU recently announced that, due to a significant increase in gambling market participants, the volume of notifications they receive has become disproportionate as the reporting of suspicious AML issues has not been growing. They have identified AML risks, particularly concerning virtual currencies, and have formally stated that they will begin systematic supervisory proceedings for gambling operators in 2025. They have promised to carry out an introductory seminar for gambling operators in Q1 of 2025 but the date is yet to be announced.
The FIU has made it clear that its supervisory audits will focus on:
- the composition of the operator’s client base,
- how the source of funds is verified,
- the payment service providers used for payments, and
- whether cryptocurrency is accepted or used for payments.
Additionally, the FIU has emphasised that, unlike the EMTA, all communications including submitted documentation (e.g., AML policies) for the supervisory purposes – must be in Estonian.
To summarise, the FIU, one of three public authorities supervising the gambling operators, has adopted a strict approach toward mapping and supervising the gambling sector in Estonia. Operators should expect thorough supervisory proceedings moving forward.
What Should Gambling Operators Do?
Given the stricter regulatory landscape, Estonian-licensed gambling operators should:
- Review their corporate structure to ensure compliance with the Gambling Act.
- Strengthen AML policies in anticipation of upcoming FIU audits.
- Stay updated on regulatory changes and participate in the FIU’s 2025 introductory seminar.
By staying proactive, operators can ensure compliance while continuing to operate successfully in the Estonian market.
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