In a public statement published by the Gambling Commission today (that can be downloaded below), it has been revealed that online gambling business 32Red has been heavily penalised for not protecting a consumer from gambling-related harm and for money laundering failures.

The Gambling Commission investigation focused on 32Red’s dealings with a customer who, between November 2014 and April 2017, was allowed to deposit £758,000 without 32Red carrying out social responsibility or money laundering checks. During that time, there were at least 22 incidents which indicated that the customer was a problem gambler. However, instead of checking if the customer needed help, 32Red gave them free bonuses and failed to check that the customer could afford their spending on 32Red‘s website.

Indications of harm included the customer:

• admitting to 32Red staff that they had spent too much,
• displaying frustration and
• chasing losses.

A penalty package of £2million has been imposed on 32Red by the Commission, consisting of:

• £709,046 divestment of financial gain
• £1.3million payment in lieu of a financial penalty, which the Commission would otherwise impose for breaches of a licence condition in accordance with its Statement of principles for determining financial penalties. The money will be spent on accelerating delivery of the National Responsible Gambling Strategy
• Payment of £15,000 towards the Commission’s investigative costs
• Improvements to policy, procedure and risk management, including:
  • an independent third party audit of AML policies, procedures and controls with recommendations accepted and implemented
  • a full review of all active customers against revised policies
  • introduction of Group Anti-Money Laundering/Counter Terrorist Financing (AML/CTF) Policy, supplemented by a regional policy for Great Britain
  • adoption of Kindred’s ‘player safety-early detection system’, to assist with the earlier detection of players that are potentially at risk of harm, enabling better detection and faster, better quality interactions
  • learnings from public statements and other guidance, as well as sister company engagements with the Commission, built into company risk management policy, followed by implementation and training for relevant staff
  • integration to a single platform across companies within the Group, so they work to unified and aligned policy.

Commenting on the regulatory settlement, Richard Watson (Commission Executive Director) has said:

• “Instead of checking on the welfare of a customer displaying problem gambling behaviour, 32Red encouraged the customer to gamble more – this is the exact opposite of what they are supposed to be doing”
• “Operators must take action when they spot signs of problem gambling and should be carefully reviewing all the customers they are having a high level of contact with”
• “Protecting consumers from gambling-related harm is a priority for us and where we see operators failing in their responsibility to keep their customers safe we will take tough action.”

The Commission recommends that gambling operators should consider the following questions to avoid the same issues:

1. Do you have systems in place to identify potential problem gamblers? Do you look at the volume and frequency of calls by customer?
2. Are your staff sufficiently trained to identify problem gambling? Do they have a picture of the customer’s behaviour readily available to them?
3. Does your business culture attempt to keep customers happy by giving them bonuses without considering whether they are problem gamblers? Are commercial considerations overriding customer protections?
4. Have you conducted an assessment of the risks of your business being used for money laundering? Is it kept under review?
5. Are you doing affordability checks? Do you know where customer money is coming from? Do you seek and use information from a wide range of sources to build knowledge of your customer, and to corroborate and test information? Do transactions seem reasonable in light of what you know about them?
6. Have you allocated sufficient resources to AML compliance? Can you promptly apply revised policies and procedures to existing active customers?
7. Do you have a culture of curiosity? Do you place more importance on making money than on risk management? Do you act quickly when you have concerns?
8. Do you recognise your VIPs or equivalents as high risk and handle them appropriately?
9. How do you encourage customers to respond to information requests? Does your monitoring system allow for timely escalations if information is not received? When would you terminate the business relationship?
10. Is your SAR regime robust? Do you make and retain records of decisions and rationale? Are reports submitted as soon as practicable?
11. Can you demonstrate due consideration of our public statements and other industry sources? Are your policies and procedures version controlled and dated?