Taking a risk-based approach to regulation
The Alderney Gambling Control Commission (AGCC) is one of the most respected and experienced licensing authorities in the world. It is a pioneer in its field, and has spent the past 23 years honing and iterating its framework.
It was also one of the first in industry to adopt a risk-based approach to licensing, leveraging its knowledge and expertise to streamline the process for operators and service providers. We discuss the advantages of adopting a risk-based approach, and why Alderney is one of only a few regulators in the sector that can do it.
What is a meant by taking a risk-based approach and how does it work?
It means taking a practical approach to regulation and licensing, applying rules and requirements to businesses only if they apply to them. This differs to other frameworks, with many having a blanket obligation for operators and suppliers to conform, even if certain rules are not relevant to their business.
It is impossible for operators and suppliers to meet the criteria for all aspects of regulation and licensing in the myriad of markets and jurisdictions in which they are active. Taking a risk-based approach allows us to ensure they are compliant with those that apply to their business and the markets they are in, and that they are meeting those standards at the highest possible level. Not all the world’s regulators can do this with confidence, however, as it requires knowledge, expertise and experience that only a few have. The AGCC is one of them.
Has Alderney been taking a risk-based approach for some time now?
Taking a risk-based approach is nothing new for Alderney. Over the past 23 years, we have been able to fine-tune our approach, and work closely with other evaluating bodies to ensure we never miss a beat. For example, the Financial Action Task Force and Moneyval provide guidance on acceptable standards in several arenas, such as anti-money laundering and terrorist financing.
What are the main advantages of taking a risk-based approach?
For a start, it is much more efficient for operators and service providers. They can drive their businesses forward in a safe and secure environment, without the burden of over-regulation. The iGaming industry has grown rapidly over the past six years, but those plying their trade in the sector have struggled to adapt their businesses to the rules and regulations in each market.
There has been a lack of harmonisation and cooperation when it comes to regulation; there is no uniform approach via a common framework shared by multiple jurisdictions. Taking a riskbased approach – providing the assessors of the risk understands the risk in the first place – helps smooth the path for businesses entering multiple markets by relieving some of the regulatory pressure being applied by this patchwork approach.
This, in turn, has had a knock-on effect for all stakeholders, particularly banks and payment processors who take comfort with the levels of oversight in place.