
Like any other business today, gambling is facing major challenges. Partial loss of assets, falling demand for services, and an economic recession due to the war are a reality in which Ukrainian legal gambling must operate today. However, in addition to external ones, there are internal challenges due to the lack of streamlined tax legislation and adequate financial monitoring rules.
This year, despite the war, the gambling business provided more than UAH 857 million in license fees and more than UAH 146 million in taxes to the state budget. Legal operators have adapted their business, continuing to work and helping the army and the State win the war.
The business demonstrates willingness to comply with state tax, licensing, and financial monitoring conditions. Legal gambling representatives only wish to have adequate and transparent rules and their business specifics taken into account. Unfortunately, this is not the case because of, for instance, the Ministry of Finance.
On 8 September 2022, on its official website, the Ministry of Finance of Ukraine published its draft regulation “On the Risk Criteria of Legalization (Laundering) of Proceeds from Crime, the Financing of Terrorism and the Proliferation of Weapons of Mass Destruction.” This regulatory act defines “risk criteria,” including for the gambling industry. As a specialized association, the Ukrainian Gambling Council has analysed the provisions of this regulation and sent its comments and suggestions to the Ministry of Finance.
We believe we had to provide these comments since numerous criteria from the draft regulation are unsuitable for the gambling industry. First, a legal gambling operator provides entertainment services and is not a banking or financial institution. The operator does not have the right to demand information about gamblers’ place of work, income, assets, credit history, or personal life. Second, numerous suggested criteria apply to legal entities, while the clients of legal gambling operators are exclusively individuals.
The Ministry of Finance failed to consider our proposals, demonstrating its lack of understanding of the specifics of legal gambling operators’ activities. Ignoring the specialized business that will apply the provisions of the draft regulation is a bad strategy. That is why I continue to stress that for the adequate application of financial monitoring criteria in the field of gambling and unhindered industry development, the following steps must be taken.
1. Remove from the draft regulation all provisions not typical of the activities of gambling operators.
2. In a separate section, set out the risk criteria exclusively for the gambling operators.
3. Apply a risk-based approach only when the relevant threshold amount of a financial transaction is reached.
I am sure that Western partners will not be happy to learn that the Ministry of Finance wants to adopt the regulatory act without considering the opinion of the public and business associations. The actions of the Ministry of Finance do not add credence to the document which they are trying to adopt despite the wishes of the business.
The business and the State are interested in creating a civilized gambling market in Ukraine, and only the Ministry of Finance plays its obscure game, doing everything possible to make the Ukrainian market unattractive to foreign investors. It is no wonder that during my international trips, gambling business representatives from different European countries claimed the Ministry of Finance to be the most inefficient body in their countries. We see a chronically negative pattern for all state apparatuses. Overcoming it should be a top priority for us, given that an adequate financial monitoring system is the key to sustainable business development, including gambling.
Anton Kuchukhidze, Chairman of the Ukrainian Gambling Council, exclusively for the Ukrainian News
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