The northern German city of is planning to shut down all of its shops after the interior senator said owners had failed to convince officials that the establishments were not fronts for money laundering. The shops have a week to appeal the .

Officials for , which is ’s smallest city-state, announced Wednesday that rejection notices have been issued to 32 establishments that had applied for licenses under the new Fourth Interstate Gambling Treaty, reports The Guardian. This implies any bets placed on their premises would with immediate effect be deemed illegal.

The city’s shops have until August 5 to legally challenge the official’s , or alternatively supply the senate with paperwork showing how they obtained their startup capital to open their businesses in the first place, such as a loan agreement with a bank.

According to Bremen authorities, they are tackling a problem that is not unique to their city but widespread across the country. A report by the finance ministry and federal police issued in 2019 claimed criminals were not only using legal gambling practices to launder dirty money but often directly investing to buy up betting establishments.

In some cases, the entire gambling activity found taking place on the shop’s premises was merely “simulated,” the report said, according to the cited source. Officials found that, in some instances, the profits showing up in the books came from illegal activities such as drug dealing.

is different from markets such as the British one, where most high-street betting establishments are run by large gambling companies. In the German case, betting shops are mostly run by smaller businesses that buy a franchise license from a larger firm.

1659034588 ulrich maurer germany bremen senator interior affairs

Bremen’s senator for interior affairs Ulrich Mäurer

“At its core, this is about checking the reliability of these operators,” Bremen’s senator for interior affairs Ulrich Mäurer told the Weser-Kurier newspaper. “We also want to guarantee that no money from dodgy businesses like drug dealing or human trafficking is being laundered here and thus flows into legal money cycles.”

Bremen authorities approached four large betting companies that operate in the city over the past few months, asking them to provide written evidence of how their franchise holders had acquired their startup capital, usually a sum of up to €120,000 ($121,900). However, none of the shops had since handed in paperwork that met the authority’s requirements, a Bremen senate spokesperson said.

“Other states in are looking with close interest at what we are achieving by taking this step,” said a spokesperson, Rose Gerdts-Schiffler. “If we are successful, I expect many of them will follow suit.”

While championed by Bremen officials, these closures were harshly criticized by Germany’s Sports Betting Association. Mathias Dahms, president of the industry body, said the city’s actions were “arbitrary, legally questionable and completely out of proportion,” while alleging they were “motivated purely by political goals.”

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