Betting Shops in Bremen, Germany Ordered to Close On Money Laundering Accusations

Posted on: July 28, 2022, 11:02h. 

Last updated on: July 28, 2022, 02:20h.

The German city of Bremen isn’t happy with betting operators. It has expressed concerns about their anti-money laundering (AML) practices, and has announced that all of the shops there will have to close.

Aerial view of Bremen, Germany
An aerial view of Bremen, Germany. The city is forcing sports betting shops to close amid allegations that they are only fronts for money laundering. (Image: Shutterstock)

A local politician in Bremen is apparently unhappy with the state of sports betting operators, according to The Guardian. The city’s senator for interior affairs, Ulrich Mäurer, calls out the companies, accusing them of being nothing more than fronts for money laundering.

The city threw up the brick wall yesterday, overturning all 32 betting licenses it issued. As a result, all shops must stop accepting bets or face allegations of illegally operating.

Bremen Backtracks Betting Legalization

Normally, in the gaming industry, the application process includes a background check to determine the eligibility and legitimacy of operators and their executives. However, that didn’t happen in Bremen.

Mäurer is demanding that the operators Bremen licensed now show sources of funds to receive their licenses. The companies have until August 5 to either challenge his order or present the documents to justify their status.

Bremen believes that the gaming industry in Germany is rife with money laundering issues. It emphasized a report from 2019 that showed that criminals use legal gambling operations to launder dirty money.

The same report said that the purchase of betting operations was also a prime target for those looking to hide the sources of illegal funds. However, it failed to mention the repeated AML violations for which Deutsche Bank has paid record fines. It also claimed that the state of Mecklenburg-Vorpommern facilitated money laundering activity that benefited Russia.

The land-based betting shops are nothing more than fronts, according to the government. In addition to buying the real estate to launder funds, more questionable activity is occurring behind the scenes. The report stated that, in many instances, the sportsbooks’ wagers were fictitious or simulated. Instead, the revenue the companies reported was money from illicit drug sales.

Operators Contribute to the Problem

Before Mäurer dropped the hammer, Bremen spent the past few months investigating its betting ecosystem. The city contacted four companies to request additional information on how they financed their launches.

However, none of those four responded with enough detail to allay authorities’ concerns. This raised a red flag and put the wheels in motion, leading to the forced stop this week.

The issue may spread across Germany. The country is already having a difficult time accepting betting and gambling following the approval of the Fourth Interstate Treaty on Gambling two years ago. However, a government spokesperson, Rose Gerdts-Schiffler, indicated that other regions of Germany are now reviewing their procedures and “many of them will follow” Bremen’s lead.

The German Sports Betting Association isn’t happy with the city’s decision. It is already engaged in a battle over sports betting advertising and has its own opinion of the city’s motives. The group called the ban “arbitrary” and “legally questionable,” adding that it is only motivated by political goals.