The European Gaming and Betting Association (EGBA) has formally accused Walletto, a payment services provider based in Vilnius, of processing deposits for unlicensed online gambling platforms. This complaint, filed with the Bank of Lithuania, follows an EGBA investigation that identified transactions linked to illegal gambling operations misclassified to bypass detection within mainstream payment networks. Walletto, which is a principal member of Visa and Mastercard, is now under scrutiny for its role in enabling these transactions, which were reportedly routed in a manner that concealed their illicit nature.
EGBA's secretary general, Maarten Haijer, emphasized that the issue is systemic, stating that illegal operators exploit legitimate financial systems to thrive. He pointed out that card schemes have a pivotal role in this scenario, as they establish the rules governing payment networks and have visibility into transaction flows that could indicate regulatory breaches. The timing of this complaint is particularly sensitive for Lithuania, which has positioned itself as a key hub for fintech in the EU, attracting numerous licensed e-money institutions and payment service providers.
The complaint comes amid increased regulatory scrutiny, as the European Commission has initiated infringement proceedings against Lithuania and three other EU member states for inadequate implementation of anti-money laundering directives. This situation raises concerns about whether Lithuania's regulatory framework is sufficiently robust to manage the growing number of payment service providers operating within its jurisdiction. The EGBA's findings, which include transactions occurring in Denmark and Poland, highlight the cross-border implications of Lithuania's regulatory practices.
As the landscape for payment services evolves, the EGBA is advocating for stronger enforcement measures against payment service providers that facilitate illegal gambling, leveraging existing regulations such as PSD2 and the EU's anti-money laundering framework. While gambling regulators can revoke licenses from unlicensed operators, they often lack direct authority over the payment intermediaries that support these operators, creating a gap in enforcement. The ongoing developments in this case could signal a shift in how financial regulators approach compliance and oversight in the gambling sector, particularly as the illegal gambling market poses significant risks to licensed operators, including major players like Flutter and Bet365, which collectively represent a substantial share of the European online gambling revenue.
The Bank of Lithuania has yet to respond publicly to the complaint, and the forthcoming actions from both the central bank and card schemes will be critical to watch. The outcome could have broader implications for the regulatory environment surrounding fintech in the Gulf region, particularly as investors and startups navigate a landscape increasingly focused on compliance and risk management.
EGBA's secretary general, Maarten Haijer, emphasized that the issue is systemic, stating that illegal operators exploit legitimate financial systems to thrive. He pointed out that card schemes have a pivotal role in this scenario, as they establish the rules governing payment networks and have visibility into transaction flows that could indicate regulatory breaches. The timing of this complaint is particularly sensitive for Lithuania, which has positioned itself as a key hub for fintech in the EU, attracting numerous licensed e-money institutions and payment service providers.
The complaint comes amid increased regulatory scrutiny, as the European Commission has initiated infringement proceedings against Lithuania and three other EU member states for inadequate implementation of anti-money laundering directives. This situation raises concerns about whether Lithuania's regulatory framework is sufficiently robust to manage the growing number of payment service providers operating within its jurisdiction. The EGBA's findings, which include transactions occurring in Denmark and Poland, highlight the cross-border implications of Lithuania's regulatory practices.
As the landscape for payment services evolves, the EGBA is advocating for stronger enforcement measures against payment service providers that facilitate illegal gambling, leveraging existing regulations such as PSD2 and the EU's anti-money laundering framework. While gambling regulators can revoke licenses from unlicensed operators, they often lack direct authority over the payment intermediaries that support these operators, creating a gap in enforcement. The ongoing developments in this case could signal a shift in how financial regulators approach compliance and oversight in the gambling sector, particularly as the illegal gambling market poses significant risks to licensed operators, including major players like Flutter and Bet365, which collectively represent a substantial share of the European online gambling revenue.
The Bank of Lithuania has yet to respond publicly to the complaint, and the forthcoming actions from both the central bank and card schemes will be critical to watch. The outcome could have broader implications for the regulatory environment surrounding fintech in the Gulf region, particularly as investors and startups navigate a landscape increasingly focused on compliance and risk management.
Source: The Fintech Times
