Alleged Reynders lottery scam exempted from EU’s new money laundering rules

A newly passed EU anti-money laundering law contains an explicit carveout for national lotteries – the exact method for which former EU Commissioner Didier Reynders is under suspicion by Belgian police, Euronews can reveal.  

The EU regulation, finalised earlier this year during Reynders’ mandate and taking effect in 2027, explicitly deems state-run lotteries to be of lower risk, and hence less in need of identity checks.  

“It should be possible for Member States to identify gambling services associated with low money laundering and terrorist financing risks, such as State or private lotteries or State-administered gambling activities, and to decide not to apply all or some of the requirements of this Regulation to them,” a Recital to the 2024 EU law says. 

The new rules allow individual governments to seek an exemption for their lotteries, which the Commission can accept or reject.  

That text did not form part of the Commission’s original 2021 proposal, and was inserted at the insistence of MEPs, remaining a contentious issue in the legislative process until late 2023, documents seen by Euronews suggest.

In practice, talks were led for the Commission by Ireland’s Mairead McGuinness. Responsibility for EU anti-money laundering policy was moved from Reynders’ Justice Department to become a financial services issue before he took up duty.  

But it will come as an embarrassment to Brussels that its law makes explicit provision for a practice to which, if allegations are to be believed, one of its senior officials was linked.  

On Tuesday, Belgian media reported that addresses linked to Reynders, who served as Commissioner for Justice for five years ending last Sunday, had been raided by police. He has not been charged with any crime, and is presumed innocent. 

According to Belgian newspaper Le Soir, Reynders allegedly made suspect operations over a long period by buying “e-tickets” from the national lottery, which has an average payout of 60%. 

Those tickets, costing as much as €100, can be purchased with cash – while winnings can be transferred via online banking. 

Though criminals more commonly invest in property or high-value goods to hide ill-gotten gains, the use of gambling, and in particular casinos, is also well known to the authorities. 

A 2015 report by EU police agency Europol details a range of scams – including criminals buying winning lottery tickets for more than the face value, or drug dealers using fixed-odds betting terminals to win back a share of their cash. 

“Casino activity is cash-intensive, competitive in its growth and vulnerable to criminal exploitation,” the Europol report said – and criminals like it because, if cross questioned by the police about the source of their money, they can simply say they won it gambling. 

The lottery appears to be a more unconventional means of money laundering, though. 

International standard-setter the Financial Action Task Force recommends that anti-money laundering checks should cover high-value transactions in casinos, but does not mention lotteries. 

In a statement released to the media, the Belgian National Lottery, co-owned by the state and its sovereign wealth fund, said that, over the last five years, it had flagged only a single case for suspect money laundering – that of Reynders. 

“The National Lottery is not attractive for those seeking to launder money,” the statement added, saying that accounts are tied to national IDs, and that anti-money laundering law applies at points of sale. 

Spokespeople for the European Commission did not immediately respond to a request for further comment, but have previously said they were unaware of Belgian authorities’ investigation until the media reports this week.