It has been announced today by the Gambling Commission that a fine of £7.1 million has been imposed on online gambling business Daub Alderney Limited (part of the Stride Gaming Group) for failing to follow Gambling Commission rules aimed at preventing money laundering and protecting vulnerable consumers. This represents one of the most substantial financial penalties yet incurred by a gambling operator for AML and social responsibility failings.
Daub Alderney Limited also received a warning under section 117(1)(a) of the Gambling Act 2005 and will have the following additional conditions placed on its licence authorising it to provide gambling to consumers in Britain:
- appoint an appropriately qualified Money Laundering Reporting Officer who holds a Personal Management Licence (PML); in appointing the MLRO to ensure the individual must undertake annual refresher training in anti-money laundering and be able to evidence this to the Commission;
- ensure that all personal management licence holders, senior management, and key control staff undertake outsourced anti money laundering training. All such staff must undertake outsourced refresher training annually thereafter the Licensee continues to segregate funds as per Licence condition 4.1 at a level of ‘medium’ as defined by our guidance;
- continue its review of the effectiveness and implementation of its anti-money laundering (AML) and social responsibility (SR) policies and procedures, and in addition engage external auditors, whose appointment and terms of reference must be agreed with the Commission, to sample the reviews that have been carried out to provide additional assurance as to the findings. The Commission requires the outcome of the review and subsequent action plan to implement any recommendations to be reported to the Commission by the person who assumes responsibility for this action, and that the Commission will have access to all the documents relating to the work.
The fact that this matter was determined by the Commission’s Regulatory Panel, rather than being dealt with by way of a regulatory settlement, underlines the seriousness with which the regulator has regarded the failings that are set out in the Summary of Decision Notice (that can be downloaded below).
Commenting on that Decision Notice, Gambling Commission Executive Director Richard Watson has said:
This action is part of an ongoing investigation into the online casino sector. The operator’s standards did not match the protections required, and this fine reflects the seriousness of these lapses.
This is the same matter in respect of which Stride Gaming PLC announced in August 2018 that a subsidiary company would be required to pay a significant financial penalty following a review by the Commission of the manner in which it had historically carried on its licensed activities. We reported further on this in a previous posting entitled “Substantial financial penalty on horizon for Stride Gaming”, at which time Stride Gaming was reportedly making provision for a £4 million financial penalty. The fine that has now been imposed by the Commission is substantially more than that.
In a “UKGC Update” statement published today (that can also be downloaded below), Stride Gaming PLC has said:
After careful consideration, the Group has concluded that whilst it believes the UKGC fine to be excessive and disproportionate, it is not in the interests of the Group’s stakeholders to appeal the UKGC’s finding or penalty.
The Board, having taken advice, remains of the belief that a penalty of no more than £4 million would be appropriate, particularly as the failings identified by the UKGC were procedural in nature and did not involve any incidence of identifiable money laundering.
Subsequent to the UKGC’s initial findings, the failings identified by the UKGC have been addressed in full. Furthermore, the controls framework required to meet its licence conditions and codes of practice have been assessed by Daub and the Company to be effective. This has been achieved through a comprehensive evaluation of that framework, supported by an independent review carried out by Deloitte LLP. In order to provide further assurance of the robustness of Daub’s existing and ongoing controls and to ensure that Daub is protecting vulnerable players, Daub has commissioned Deloitte LLP to carry out biennial control audits in order to independently assess the operating effectiveness of those controls.
Nigel Payne, Non-Executive Chairman of the Company commented:
“Stride Gaming considers that robust anti-money laundering and social responsibility controls are extremely important. It acknowledges and entirely supports the more robust steps taken by the UKGC in recent years to drive improvements across the industry.
“We remain disappointed with the particular circumstances of this case and with certain factual inaccuracies which were presented by UKGC to the Regulatory Panel in the course of the proceedings, which we believe coloured the size of the fine that has been imposed.
“We are of the view that both the industry and its regulator must be as one in its combined attempt to better regulate the industry and accordingly, we will be seeking to engage with the UKGC to improve the robustness of the process that we have just been through.
Domain names operated by Daub Alderney Limited pursuant to its Gambling Commission remote operating licence are: