Gambling Commission brands AML procedures as “not fit for purpose” in Compliance report

The UK Gambling Commission has published its Compliance and Enforcement report for 2020/21, highlighting shortcomings in social responsibility and anti-money laundering (AML) procedures in the past year.

This comes after gambling minister Chris Philp spoke on the government’s commitment to implementing a single customer view earlier this week.

The Commission’s Compliance and Enforcement report

Yesterday, the Commission published the annual Compliance and Enforcement Report which includes findings of the regulator’s casework against licence holders and detailing where the industry needs to raise standards.

The latest report covers the financial year 2020 – 2021, a period during which Commission casework led to the suspension of five operator licenses and the revocation of licenses for one operator and nine personal management licence holders.

During this time, £32.1m was paid by 15 gambling businesses as a result of fines or regulatory settlements.

AML shortcomings

In its report, the Commission noted that there were several failings when it comes to AML procedures and said this may be down to a prioritization of profit over compliance.

The regulator said: “The reasons for these failings are almost as concerning as the failings themselves. Our casework reveals that operators are either not making suitable resources available or are simply putting commercial objectives ahead of regulatory ones. This is simply unacceptable and will be seen as such by others in the industry who work hard to achieve compliance.”

The report also cited a lack of due diligence as a major contributing factor to the failings but AML in particular.

This includes having inadequate due diligence measures in place, to begin with, failing to apply due diligence in circumstances where it should apply, and over-reliance on third parties to carry out due diligence checks.

The report also found that many operators have set the threshold for checks too high and were based on single metrics rather than looking at the bigger picture.

Several operators were also found to have “inadequate risk assessment methodology” in place for money laundering and terrorist financing. At the same time, operators failed to consider how problem gambling could be linked to money laundering and terrorist financing.

In its report, the regulator cited cases that involved inadequate checks which included when it fined Casumo £6m in March after a player was allowed to lose £1.1m without a responsible gambling interaction.

The report also raised concerns that operators were more worried about failures to comply with social responsibility guidelines coming across negatively in the press when the primary concern should be cracking down on money laundering and terrorist financing.

The report reminded licensees that they are expected to fully comply with the terms of their license “as relevant to anti-money laundering (AML) and counter-terrorist financing (CTF).”

Additionally, casino licensees must comply with the requirements of the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations of 2017, including amendments made by the government in 2020 and 2021.

Commission’s CEO expresses disappointment

The Commission’s newly appointed Chief Executive expressed disappointment at the findings.

Gambling Commission Chief Executive Andrew Rhodes said: “As the Commission’s new Chief Executive, I am impressed by the amount of enforcement work carried out, but it is also disappointing that it should be necessary. Looking back at enforcement in 2020/21 we see the same two weaknesses in almost every case – operators failing to adhere to social responsibility and anti-money laundering rules.

“The reasons for these failings are almost as concerning as the failings themselves. Our casework reveals that operators are either not making suitable resources available or are simply putting commercial objectives ahead of regulatory ones. This is simply unacceptable and will be seen as such by others in the industry who work hard to achieve compliance.”

Rhodes added: “Of course, I know that many gambling firms have had a difficult 18 months, and that the future of many companies was unclear. Hard decisions were made to save jobs and livelihoods.

“Whilst the threat of COVID-19 hasn’t gone away, the gambling sector has largely resumed operations. As Great Britain’s regulator for the gambling industry, we still see far too many breaches of regulations where everyone in the industry agrees we should not see them. The industry has the resources, skills and knowledge to change this.”