The Gambling Commission has announced this morning that, following an investigation by the Commission, a regulatory settlement has been concluded under which Petfre (Gibraltar) Limited (trading as Betfred) is to pay £322,000 for anti-money laundering failings.

The Commission’s investigation revealed that Petfre failed to carry out adequate source of funds checks on a customer who deposited £210,000 (and subsequently lost £140,000) of stolen money in a 12-day period in November 2017.

The Commission has concluded that “a customer being able to deposit and lose such significant amounts in such a short period of time clearly indicated failings in the effectiveness of Petfre’s anti-money laundering policies and procedures”.

The regulatory settlement package consists of:

1. Petfre divesting itself of the gross gambling yield of £140,000 it received as a result of the gambling of the customer. This money is to be returned to the victim whose money was stolen.
2. A payment in lieu of a financial penalty of £182,000 which the Commission will direct to work which accelerates the delivery of the National Strategy to Reduce Gambling Harms.
3. Agreement to the publication of a statement of facts in this case.
4. Payment of £15,168.42 towards the Commission’s Investigative costs.

The public statement relating to this regulatory settlement can be downloaded below. It contains the following good practice recommendations for remote (online) and non-remote gambling operators:

• Do you conduct appropriate assessments of the risks of money laundering and terrorist financing for your business?
• Do you have effective measures for CDD, the ongoing monitoring of customers, and enhanced customer due diligence? Are these sufficiently risk focused, including the risk profiling of customers for these purposes and are they triggered at an appropriate stage of the relationship with the customer?
• Do you have policies and procedures in place which makes specific provision for using all relevant sources of information?
• Are your AML policies and procedures effective?
• Are you alert to the risks various customers might bring?
• Are you conducting appropriate customer interactions? Can you adequately evidence these customer interactions?

In terms of our own comment on this latest enforcement action by the Gambling Commission, a new customer depositing £210,000, of which £140,000 was lost, all within a 12 day period, should have raised all manner of alarm bells. Betfred seem to have heard those bells ringing because they twice requested source of funds information, but then seemingly did nothing when the customer failed to provide it. This certainly highlights the need not only for effective EDD in such circumstances but also for effective customer interactions – a subject that will take on even greater importance when the updated LCCP requirements in this respect come into force at the end of this month. That Betfred did not incur any greater penalty is no doubt down to the constructive manner in which they responded to the Gambling Commission’s investigation. All UK licensed operators – including very importantly those located overseas – should take careful note of the learning to be derived from this case, as set out in the public statement.

With that last comment in mind, why so many overseas based remote operators have encountered such regulatory problems will feature in next week’s “Safeguarding Standards – A cross-country snapshot” conference that we are co-hosting with Valletta boutique law firm City Legal at the Dragonara Casino in Malta on Thursday 17 October – for more details of that conference see our website posting here. Some limited ticket availability remains so do please let us know ASAP – by email to dc@cliftondavies.com – if you wish to attend.