Money laundering and gaming

1. Money Laundering and Gaming
Risk Based approach
Written by Federico Lannes (*) and with the contribution of Marcelo Munhoz da Rocha (**)
Money laundering as a global crime
The infiltration of dirty money is a crucial problem from national economies. The purchase of
shares,of real estate,the establishmentof dirtyinvestmentfundsandthe use of landbased casinos
ande-gamingfor embeddingof suchresourcesisadangertothe credibilityof awhole country,and
in particularto the securityof the financial andbankingsystem. Understandingthe adverse effects
of money laundering in the countries economies will help to take effective steps with this global
problem.
Money launderers and terrorist financiers exploit both the complexity inherent in the global
financial systemas well as differences betweennational AML/CFT laws and systems,and they are
especially attracted to jurisdictions with weak or ineffective controls where they can more easily
move their funds without detection.
AccordingaPWCsurvey (1),Globalmoneylaunderingtransactionsare estimatedat2to5% of global
GDP, or roughlyU.S.$1-2 trillionannually.Yetaccordingto the UnitedNationsOffice onDrugs and
Crime (UNODC),lessthan1%of global illicitfinancialflowsare currentlyseizedbyauthorities2. But,
the Financial Action Task Force (FATF), an inter-governmental body set up to combat money
laundering, said: “Overall,it is absolutely impossible to produce a reliable estimate of the amount
of money laundered.”
What is the connection with society at large?
Asstatedby GAFI,the social and political costsof moneylaundering,if leftuncheckedordealtwith
ineffectively, are serious. Organised crime can infiltrate financial institutions, acquire control of
large sectors of the economy through investment,or offer bribes to public officials and indeed
governments.
The economic and political influence of criminal organisations can weaken the social fabric,
collective ethical standards, and ultimately the democratic institutions of society. In countries
transitioning to democratic systems, this criminal influence can undermine the transition. Most
fundamentally, money laundering is inextricably linked to the underlying criminal activity that
generated it. Laundering enables criminal activity to continue.
(*) Federico Lannes, International Business Consultant federicolannes@hotmail.com
(**) Marcelo Munhoz da Rocha, Lawyer at Betconsult consulting firm
(1) PWC , Anti-Money Laundering: Global Economic Crime Survey 2016

2. Casino industry and money laundering
Casinosare bydefinitionnon-financialinstitutions.Aspartof theiroperationcasinosoffergambling
for entertainment, but also undertake various financial activities that are similar to financial
institutions, which put them at risk of money laundering.
Casinos accepts money deposits; give credits, conducting money exchange; money transfers;
foreign currency exchange; debit card; cashing facilities, cheque cashing. In many cases these
financial services are available 24 hours a day.
Casinos are by nature a cash intensive business and the majority of transactions are cash based.
During a single visit to a casino a customer may undertake one or many cash or electronic
transactions, at either the „buy in‟ stage, during play, or at the „cash out‟ stage.
It is the variety, frequency and volume of transactions that makes the casino sector particularly
vulnerable to money laundering.
Global Gaming Industry figures
“Accordingto Bloomberg,the gamingindustryhas movedits epicentertothe Asianregion.Thisis
mainly due to Macau, surpassing Las Vegas’ total revenue.In 2013, Macau’s revenue of 43 billion
USD, where two-thirdswere fromhigh-rollinggamblersandaroundsix timeslargerthanLasVegas’
gaming revenue. In line with PwC Global Gaming Outlook, the Asia- Pacific region will have the
CompoundAnnual GrowthRate (CAGR)of 18.3% through2010-2015, the fastestgrowthrate among
all world regions.” (2)
(2) PWC Report - Global Gaming Industry Regulatory Frameworks, 2015

3. Latin America gaming revenues
A PWC survey (3) statesthat“althoughLatinAmericahasthe lowest gamingmarketrevenue among
the otherregions,itwillhave one of the highestCAGR(8.1%) during2010-2015 andisforecastedto
be the second fastest growing region over the next five years.
“In 2006, the market revenue was 2,584 million USD, and by 2015, it is projected to reach 5,614
millionUSD.Between2009 and 2010, due to the global economicsetback,the industrywentdown
from a 10.2% to 5.5%.
As the economies gradually recover, the revenues in the gaming industry are slowly reaching the
growth levels the industry had in the past.
InLatin America,the largestmarketsare Argentina,Mexico andChile.Eventhoughmarketrevenue
in Argentinaaccountsfor over a half of the region,the industryis expandingat the fastestpace in
Chile.”
“Argentinaisthe leadingcasinogamingmarketinLatinAmerica,withforecasted3,501millionUSD
in revenues and a CAGR of 8.6% between 2011 and 2015”. (4)
(3) PWC Report - Global Gaming Industry Regulatory Frameworks, 2015
(4) PWC Report - Global Gaming Industry Regulatory Frameworks, 2015

5. International efforts to combat Money Laundering
The Financial Action Task Force (FATF), established by the G-7 countries in 1989. FATF is an
intergovernmental body,comprising 34 member jurisdictions and two regional organizations, and
whose purpose is to develop and promote policies to combat money laundering and terrorist
financing.FATFhassetout40+9 recommendationsthatoutlinethe basicframeworkforanti-money
laundering and terrorist financing efforts.
Regardingthe Casinoindustry, The Financial ActionTaskForce (FATF), issue two imporant reports
(2008) Risk Based approach guidance for Casinos
(2009) Vulnerabilities of Casinos and Gaming Sector
Egmonton Group:In 1995, a groupof Financial Intelligence Units(FIUs) metatthe ArenbergPalace
in Brussels and decided to establish an informal group whose goal would be to facilitate
international cooperation. Now known as the Egmont Group of Financial Intelligence Units, these
FIUs meet regularly to find ways to cooperate, especially in the areas of information exchange,
trainingand the sharingof expertise.Canadahas beenan active memberof thisgroup since 2002.
Web site at http://www.egmontgroup.org
Other Organizations involved in combating money laundering that have observer status with the
FATF include the AsiaDevelopmentBank,the EuropeanBankforReconstructionandDevelopment
(EBRD),the Inter-AmericanDevelopmentBank(IADB),the International MonetaryFund(IMF),the
Offshore Groupof BankingSupervisors(OGBS),andthe UnitedNationsOffice for DrugControl and
Crime Prevention (UNODCCP).
Many of these international organizationshaveformulatedmajoranti-money-launderinginitiatives
at http://www.oecd.org//fatf/Initiatives_en.htm
There are alsoothereffectivetoolstoevaluatethe countryriskexposureinMoneyLaunderingand
Terrorist financing http://www.knowyourcountry.com/index.html
Money laundering definition.
Basedonthe International Compliance Associationdefinition (5) ,“Moneylaunderingisthe generic
termusedto describe the processbywhichcriminalsdisguise the original ownershipandcontrol of
the proceedsof criminalconductbymakingsuchproceedsappeartohave derivedfromalegitimate
source.”
(5) http://www.int-comp.org/careers/a-career-in-aml/what-is-money-laundering/

6. There are three widely recognized stages in the money laundering process
Placement, the stage at which criminally derived funds are introduced in the financial system.
Layering, the substantive stage of the processin whichthe propertyis ‘washed’andits ownership
and source is disguised.
Integration, the final stage at which the ‘laundered’ property is re-introduced into the legitimate
economy.
Thisthree stageddefinitionof moneylaunderingishighlysimplistic.The realityisthatthe so called
stages often overlap and in some cases, for example in cases of financial crimes, there i s no
requirement for the proceeds of crime to be ‘placed’.
The need for casino sector-specific risk assessments
PreventingGamblingfrombeingasource of crime isthe maingoal of any AMLpreventionprogram.
By usinga Risk Basedapproach framework,it encompass all the standards the FATF (The Financial
Action Task Force ) adopted a set of guidance papers on the application of the RBA for different
business sectors like banking, and also the casino industry.
What is risk?
Risk can be defined as the likelihood of an event and its consequences. that may happen and the
degree of damage or loss that may result from such an occurrence. In the context of money
laundering/terrorist financing (ML/TF), risk means:
Threats: this could be a person (or group), object that could cause harm. In the ML/TF context, a
threat could be criminals, facilitators, their funds or even terrorist groups.
Vulnerabilities:elementsof abusinessthatcouldbe exploitedbythe identifiedthreat.IntheML/TF
context,vulnerabilitiescouldbe weakcontrolswithinareportingentity,offeringhighriskproducts
or services, etc.

7. Probability = likelihood of occurrence
Impact: thisrefersto the seriousnessof the damage thatwouldoccurif the ML/TF riskmaterializes
(i.e. threats and vulnerabilities)
What is risk management?
It isthe processthat includesthe recognitionof ML/TFrisks,the assessmentof these risks,andthe
development of methods to manage and mitigate the risks that have been identified.
What are inherent and residual risks?
Whenassessingrisk,itisimportantto distinguishbetweeninherentriskandresidual risk.Inherent
riskis the intrinsicriskof an eventor circumstance that existsbefore the applicationof controlsor
mitigation measures.
On the other hand, residual risk is the level of risk that remains after the implementation of
mitigation measures and controls regarding business, activities and clients.
What is a risk-based approach?
In the context of ML/TF, a risk-based approach is a process that encompasses the following:
A. The risk assessment of casino business activities using certain prescribed elements;
Products, services and delivery channels;
Geography;
Clients and business relationships;
Other relevant factors.

8. B. The mitigation of risks through the implementation of controls and measures tailoredto
the identified risks;
C. Keeping your customer (KYC) identification and, if required, beneficial ownership and
businessrelationshipinformationuptodate inaccordance with the assessed level of risk;
D. The ongoing monitoring of transactions in accordance with the assessed level of risk.
Assessing and mitigating the risk of ML and TF is not a static exercise. The risks that have
been identified may change or evolve over time as new products or new threats in the
industry.Consequently, the risk-basedapproachshouldbe re-evaluatedandupdatedwhen
the risk factors change.
Benefits of a risk assessment approach
Providing effective reporting to executive management Identifying unmitigated risks that require
immediate action. An effective risk-based approach will allow casinos to exercise reasonable
business judgement with respect to customers.
With a risk based framework the compliance costs can be reduced, and mitigate the economic,
reputational, operational, legal and regulatory riks.
A risk-based approach focuses the effort where on high risk variables and their impact and
mitigationresponses.Thisisbecause regulatorycompliance activitiesdonotalways entail effective
risk management.
A risk-based approach allows a reporting entity to develop a tailored AML/CTF risk management
strategy and programme that specifically reflects that reporting entity’s operations, environment,
customers, products and technology.
A risk-based approach is less prescriptive and more responsive to changes in risks, which is
particularly important when managing the risks of money laundering and terrorism financing
activities.
A risk-basedapproachreliesoncorrectlyidentifyinghow the potential riskof moneylaunderingand
terrorism financing to the specific operations of the reporting entity.

9. Challenges to overcome in a risk based approach
There are no universally accepted methodologies that prescribe the nature and extent of a risk-
based approach. However, an effective risk-based approach does involve identifying and
categorising money laundering and terrorist financing risks and establishing reasonable controls
based on risks identified.(6)
However, it should be noted that applying a risk-based approach is not mandatory. A properly
appliedrisk-basedapproachdoesnotnecessarilymeanareducedburden,althoughitshouldresult
in a more cost effective use of resources. (7)
The limitationstothe risk-basedapproachare usuallythe resultof legal orregulatoryrequirements
that mandate certain actions to be taken.
(6) GAFI / Risk Based Approach guidance for Casinos
(7) GAFI / Risk Based Approach guidance for Casinos

10. Risk based approach framework and steps
1. Risk assessment : Identify and mitigate Risks
2. Develop a KYC (Know your customer) identification and record keeping policy
3. KYE ( Know your employee) screening policy.
4. Ongoing monitoring of transactions and reporting
5. Internal controls
6. Compliance officer designation
7. Ongoingcompliance trainingprogram(foremployeesorotherindividualsauthorizedtoact
on your behalf). The training program has to be written and maintained overtime
8. independent audit review to evaluate AML Program
9. Develop a compliance culture with the tone at the top.
Risk based approach framework
1. Risk assessment : Identify and mitigate Risks
GAFI sets risk categories factors described which affect customer risk and are not intended to be
prescriptive or comprehensive.They will not apply universally to all casinos, and even when these
factors are present there may be different risk outcomes for different casinos and operators
depending upon a host of other factors.

11. RISK CATEGORIES Based on GAFI (FATF) recommendations
We remark the legal / regulatory environment where transparency rules and guidance provide
certainty to business and authority effective implementation to achieve the objectives of the
framework compliance framework.
It should be necessary Implemented in ways that minimise compliance costs on industry to the
extent feasible.
No matter what individual procedure is adopted, the guiding principle will be that there is an
awarenessof legal responsibilitiesof eachcasino operatorasdirectresponsible forcomplyingwith
the regulatory obligations.
In the absence of this transparency the authority may be perceived as unpredictable which may
undermine even the most effective application of the risk-based approach by casinos.
Risk tolerance
It isan importantcomponentof effective riskmanagement.Whenconsideringthreats,the concept
of risktolerance will allow youtodetermine the levelof exposure (e.g.numberof high-riskclients,
inherently high-risk products, etc.) that you consider tolerable.

12. To do so,you may want to consider the following risk categories that could affect your business:
• Regulatory risk
• Reputational risk
• Legal risk
• Financial risk
Adverse risks of non-compliance:
 Financial sanctions from regulatory entity
 The impact on customers who do not want to play in casinos on the public spot
 Industry machine Vendors aware of the sanctions to the casino will not sell anymore
 Suspension of business activities due to operational and financial impact of sanctions
 Losing of the gaming license
 Bad reputation in the industry due to sanctions
Your risktolerance will have adirectimpactonthe followingstep:creatingrisk-reductionmeasures
and key controls, your policies and procedures, and training.
Inherent and Residual Risks
In Enterprise RiskManagement – IntegratedFramework(2004), COSOdefines inherentriskas the
risk to an entity in the absence of any actions management might take to alter either the risk’s
likelihood or impact.
Residual risk is the risk remaining after management’s response to the risk.

13. A risk map is a graphicrepresentation of likelihoodandimpactof one ormore risks.Riskmapsmay
plotquantitativeorqualitativeestimatesof risklikelihoodandimpact.Often,riskmapsare referred
to as “heat maps” since they present risk levels by color, where red represents high risk, yellow
moderate risk, and green low risk
Identifying the inherent risks to will require you to look at the vulnerabilities to ML/TF.
What Are the Four Risk Responses?
Avoidance is a response where you exit the activities that cause the risk. Some examples of
avoidance are exiting product line, selling a division, or deciding against expansion.
Reduction is a response where action is taken to mitigate the risk likelihood and impact.
Sharing isa response thatreducesthe risklikelihoodandimpact bysharinga portionof the risk.An
extremely common sharing response is insurance.
Acceptance is a response where no action is taken to affect the risk likelihood or impact.

14. 2. Develop a KYC (Know your customer) identification and record keeping policy
Customer Due Diligence
RegardingGAFI(FATF) reportRBA guidance,“CasinosshouldapplyCDDtoall customerswhenthey
engage in financial transactions in a casino at a particular financial threshold (…)
Examplesof financialthresholdsincludethe purchaseorcashinginof casinochips,ticketsortokens,
the opening of accounts, wire transfers, and currency exchange.
This threshold applies to either a single transaction, or to several transactions that appear to be
linked. Operatorswithmultiplewebsitesshouldapplythethresholdpercustomernotperwebsite.”
The CDD procedures should include:
 Identify and verify the identity of each customer.
 Identify any beneficial owner (i.e.the natural person(s) who ultimately ownsor controls a
customer and/or the person on whose behalf a transaction is being conducted.
 Customers that are Politically Exposed Persons (PEPs).
 Obtainappropriate additional informationtounderstandthe customer’scircumstancesand
business
3. KYE ( Know your employee) screening policy.
Employee screening
 New and existing staff Personal and/or Professional background
 will likely go further than just senior staff, and into anyone involved or with access to
financial transactions and compliance information
Does your recruitment process already include this
 speak to your HR team
 develop (or share) a management framework
 carefully consider privacy implications
 who has access to information
 who needs access to information
 Update your recruitment guidelines - for both new staff and changes of role
Red Flags regarding employee behavior changes
 Sudden and significant changes in their standard of living.
 Lifestyle and spending habits that aren’t consistent with their salary, financial positionor
level of indebtedness.
 If employee refuses to take time off for no apparent reason.
 Employees who don’t allow other colleagues to assist certain customers.
 If employee suspiciously receives gifts or gratuities on a regular basis.
 Employees who are reluctant to accept any promotions or changes in their activities.
 Employeeswhostayat the office afterworkinghoursor that go to the office at oddtimes
for no reasonable explanation

15. 4. Ongoing monitoring of transactions and reporting
Monitoring customers and their gambling is essential to ensure effective application of AML/CFT
policies,procedures,internalcontrolsandautomatedsystems.Italwaysmustbe doneinanongoing
basis.
There is a needforgreatervigilance of patternsof transactionsand play,unusual transactionsand
possible indicators of suspicious transactions.
Suspected money laundering in casinos is detected in two main ways:
 through surveillance on-site
 through financial intelligence with information systems in place
Transaction monitoring
A reporting entity must put in place a transaction monitoring program
The extenttowhich transactionsshouldbe monitored,isto be determined,ona riskbasis,having
regard to the customer’s risk classification and the risk factors set out in the Rules
Managementshouldperiodicallyevaluate the appropriateness of filtering criteria and thresholds
 Managing Alerts
 Have policies & procedures in place for detecting unusual activity from customers.
 Establish a clear & defined escalation process from the point of initial detection to
conclusion of the investigation.
 System alert framework is needed to avoid discretion from staff criteria
Managing Alerts
When multiple departments are responsible for researching unusual activities, lines of
communication must remain open.
 Allows multiple departments to gain efficiencies by:
 Sharing information
 Reducing redundancies
 Ensuring all suspicious activity is identified, evaluated, & reported
The FATF Recommendations require casinos to keep records for five years. Such records must be
sufficient to permit reconstruction of individual transactions (including the amounts and types of
currency involved, if any) so as to provide, if necessary, evidence to criminal activity. Casinos are
likelytokeepsufficientrecordsof transactionsforother reasons, e.g. marketing and promotions.
With regard to Internet casinos, checksmay be made on the location of the computer usedwhen
casino accounts are opened, or during gambling, including IP checks. IP addresses provide
information about the country where the computer being used is located.
Transactions reporting

16. Decision maker should have the authority to make the final SAR (Suspicios Activity Report) filing
decision, based on:
 An established decision-making process
 The company has followed existing policies, procedures, & processes
 Document SAR decisions, including the specific reason for filing or not filing a SAR
 Thorough documentation provides record of SAR decision-making process, including final
decisions not to file a SAR
5. Internal controls
Internal controlsshouldmitigate the inherentriskof any high-riskaccount,customer,product,
or service aswellastransactionstoorfromahigh-riskcountrythatcouldbe misusedformoney
laundering or terrorist financing.
Casinos internal controls should be commensurate with:
 Complexity, organisation, and relative size of the business;
 Risksposedbythe typesof gamblingandfinancialservicesofferedaswellasthe volume
of business;
 Risks posed by the types of customers and geographical location
Internal controls should cover all related activities and programs such as:
 Suspicious activity reporting regarding the threshold set by regulatory authority
 Currency transaction reporting (where required),
 Customer and patron identification
 policies and procedures in place when dealing with high-risk situations (e.g. for
politically exposed persons (PEP).
 Policies about proper staff training
 Establishment of a compliance department
 Casino recordkeeping, and compliance
 Account opening and documentation procedures,
 Managementinformationsystemsadequatetodetectandreport suspiciousactivityin
a timely manner
6. Compliance officer designation
A Casinomust designate an‘AML/CTF Compliance Officer’atmanagementlevel according
to AML laws .The positionensuresthe Boardof Directors,managementandemployeesare
in compliance withthe rulesandregulationsof regulatoryagencies,thatcompanypolicies
and procedures are being followed, and that behavior in the organization meets the
company’s Standards of Conduct.
Compliance officer main duties

17.  Developsandcontrol policiesandof the AMLlaunderingprogramtopreventillegal,
unethical, or improper conduct.
 Cooperation with other departments (e.g., finance, cage, Internal Audit, human
resources,etc.) to evaluate effectivenessof compliance policiesandproceduresin
place.
 Is the liason between the COAF authorities and the company.
 Company problems resulting from non-compliance activities can include
misunderstandingsof policy orcurrentlegislation,technical reportingissuesornon
adequate staff training. In this abilityy, Compliance Officers require abilities in
dealing with others in situations of non-compliance in order to correct non-
compliant conducts or rules.
 Acts as an independent review to ensure that compliance Issues/concerns within
the organization are being appropriately evaluated, investigated and resolved.
 Reports on a regular basis, and as directed or requested, to keep the regulatory
authority an the Board t informed of the compliance efforts.
 Management the compliance Hotline.
7. Ongoing compliance staff training program
Training staff objetives
 their obligations under the AML/CTF Act and Rules
 the consequences of non-compliance
 the nature and consequences of ML/TF risk they may reasonably face
 the processes and procedures in the AML/CTF program that are relevant to their role.
Suggested compliance course content
 Trends in the prevention of money laundering
 Domestic legal framework and regulations
 Client Identification Program
 Know Your Customer Program
 Customer’s Risk Profile
 Decentralized Monitoring of Transactions
 Unusual/Suspicious Transactions Report
 Money laundering and Terrorist Financing Methodologies
8. independent audit review to evaluate AML Program
A Casinomustensure thatitsAML/CTFProgram, includingeachof itscomponents,issubjectto
regular independent review.

18. This reviewof of an AML/CTF program must be carried out on a regularbasisby an internal or
external partydeterminedbythe reportingentity(forexample,aninternal orexternal auditor).
It shouldbe conductedin accordance withgood review andauditpractices.The review should
be carried out by a competent person who is free from bias and conflict of interest.
The purpose of the review should be to:
 Test the effectiveness of the AML/CTF Program having regard to the AML/CTF risks
faced by the reporting entity
 Ensure that the AML/CTF Program complies with these Rules
 ensure that the AML/CTF Program has been effectively implemented
 Ensure that the reporting entity has complied with its AML/CTF Program
 Continuous improvement in control, procedures and processes
 the extent and effectiveness of the staff AML/CTF awareness training
 the completion of appointments of staff to AML/CTF roles
 the performance of staff in AML/CTF activities
 the completion of AML/CTF compliance reporting
The recommendations include, but are not limited to:
 Corrective actions to address compliance failures
 Changes to improve the AML/CTF program
 changestobothcompliance andoperational processestoimprovethe managementof:
 ML/TF business risks
 ML/TF regulatory risks. AML/
9. Develop a compliance culture with the tone at the top.
The ‘culture’ of a business comprises the experiences, attitudes, beliefs and values of the
organisation. These control the way people interact with each other and withstakeholders
outside the organisation such as customers, suppliers and regulators.
Organisations that are successful in embedding a compliance culture often follow a similar
process.A useful firststepto learn the extentof the compliance culture and indicate some
of the things that may need doing is to complete a compliance culture

19. Reputation risks are now considered as great as strategic, operating and financial risks,
according to a recent survey conducted by Forbes Insights on behalf of Deloitte Touche
Tohmatsu Limited. The 2014 global risk survey: Reputation@Risk found that 88% of more
than 300 respondents say they are explicitly focusing on reputation risk as a key business
challenge. (8)
According to the Institute of Internal auditors (9) , “A strong ethical culture, including clear
expectations for acceptable conduct within the organization and with third parties, is
essential for good governance.
Ethical behavior, however, involves much more tan a code of ethics. The audit committee
playsa critical role inensuringthatan organization’sculture alignswithitscode of conduct,
that behaviors are consistent from top to bottom, and that corporate values resonate
throughout the organization. But getting a true understanding of an organization’s ethical
culture can be difficultwhenthe peoplethe auditcommitteereliesonmostforinformation
about the organization — senior management — are the people who, ultimately, must be
held most accountable.”
(8) http://deloitte.wsj.com/riskandcompliance/2014/12/15/building-tone-at-the-top-the-
role-of-the-ceo-board-and-coo/
(9)
http://www.kpmg.com/BE/en/IssuesAndInsights/ArticlesPublications/RiskNewsletter/Docu
ments/ToneAttheTop.pdf

20. Anti Money laundering Legal framework in Brasil
By Marcelo Munhoz da Rocha (*)
Money laundering is a crime in Brazil, and its provisions are brought by Federal Law 9.613/1998.
This law has undergone recent renovations because of Federal Law 12.683/2012.
The crime of MoneyLaunderinghasan accessory characteristic.Itsexistence isverifiedbyatypical
connection relationship with a previously committed criminal offense (called prior offense, which
caused the perpetrator to obtain an illegal financial advantage).
Until the conductionof suchlegal reform, the crimeof MoneyLaunderingwouldonlyhappenwhen
the previouslycommittedcriminaloffense wasacrime,andthiscrime wouldhavetobe includedin
the exhaustive list pointed by the law.
With that, what he had was a true failure as to the applicability of that law, which only reached
situationswhere theprioroffensenecessarilyhadtobe acrime,whichmuststillbe inthe exhaustive
list of the law, namely: drug trafficking, terrorism, terrorist financing, smuggling of arms and
ammunition, extortion by kidnapping, crimes against public administration and crimes against the
national financial system.
Thus, it appears that, until the recent renovation made possible by the aforementioned Law
12.683/2012, the crime of money laundering wouldonly be typified when the prior offense was a
crime fit under the mentioned exhaustive list.
Then,the adoptionof Law12.683/2012 introducedimportantaspectstothe law 9.613/1998, which
turned it into a more complete Money Laundering Law, ie a third generation law.
Inotherwords,there wasasignificantincrease tothe incidenceof the criminal law,whichexpanded
the spectrum of criminal application relating to money laundering and atypical situations before,
now become typical.
Then, the law does not provide a closed and ironclad list of previous offenses anymore. After the
reform made by the "new" law, any criminal offense (not just those specific crimes) that can
generate assets of illicit origin will be considered as a prior offense for typifying the money
launderingoffense.Inotherwords,the prioroffensecannow be a crime (any) or a misdemeanor.
Currently (since 1946), gambling in Brazil, is considered a misdemeanor.
That is,before the reformof the MoneyLaunderingLaw,itwasnotpossibletohave criminal liability
by Money Laundering when the previous offense was a misdemeanor.
With the legal reform, Money Laundering is now possible also when the previous offense is a
misdemeanor (gambling, for exemple).
(*) Lawyer, member of Betconsult consulting firm

21. Thus, it is noticed that the Brazilian legislation presentsresponse to money laundering practice,
even when the prior offense is a misdemeanor (which is the case of gambling, currently).
With the imminent approval of the legalization of gambling in Brazil,exploitation of gambling will
no longer be a misdemeanor, when it occurs withinthe limits established by law and regulations.
However,the exploitationof gamblingdone outsidethe limitsauthorizedbylaw willbe considered
a crime (not a misdemeanor anymore).
Thus,itis possibletoconclude thatthe Brazilianlaw prohibitsmoneylaunderingwhenthe previous
offense is a gambling operation (currently is a misdemeanor and after the approval of the law,
should be a crime).
Sotherefore,itisclearthatthemoneylaunderinglegislationinBrazilisathirdgenerationlaw,which
isapplicable toanyprior criminal offense,whether misdemeanor (gambling currently) or crimes.