Buzz Bingo fined and formally warned over AML and social responsibility failings

The Gambling Commission has today (16 December 2021) announced imposition of (a) a £780,000 fine and (b) a formal warning on bingo club and operator, Buzz Group Limited.

It is worthy of note that a fine has been imposed rather than the enforcement action commenced by the Commission concluding by means of a regulatory statement.

Bearing in mind comment on the Commission’s regulatory sanctions register that the Buzz Group “co-operated with the Commission throughout the investigation and took corrective steps to address the identified failings”, speculation arises why no regulatory settlement was concluded in this matter.

The Commission’s current Statement of Principles for Licensing and Regulation makes it clear that such settlements are only considered suitable where a licensee is:

  • open and transparent in its dealings with the Commission
  • able to make timely disclosures of material facts to the Commission
  • able to demonstrate that they have insight into apparent failings
  • able to suggest actions that would prevent the need for formal action by the Commission
  • prepared, where appropriate, to agree to the publication of a public statement by the Commission setting out the failings in order to deter future non-compliance by others and/or share learning that may be beneficial to the wider industry or other stakeholders including the public
  • prepared to divest itself of any gross gambling yield or cost savings which accrued as a result of the failings
  • prepared to follow advice and implement procedures to ensure there is no repetition of failings
  • prepared to contribute to the direct costs to the Commission of investigating the matter in respect of which regulatory settlement is sought
  • prepared to volunteer a payment in lieu of the financial penalty the Commission might otherwise impose for breach of a licence condition in accordance with the Statement of Principles for Determining Financial Penalties.

It may be that an influencing factor will have been the fact that many of the AML and social responsibility failings listed in the Commission’s following announcement represent the type of failings that have regularly been identified in so many previous cases of enforcement action by the Commission. Such failings have been widely publicised, including by way of Public Statements on the regulator’s enforcement action webpage, in order to enable operators to learn from others’ failings and to deter them from making the same mistakes themselves.

Examples in this case include:

(a) from an AML perspective:

  1. over-reliance on open source/anecdotal information when conducting source of funds checks
  2. in one case, reliance placed on funds used for gambling constituting recycled winnings, with no consideration given to whether such funds might instead have constituted the proceeds of crime (although more detailed information is required in order to understand all applicable circumstances in this case)
  3. no interactions taking place despite multiple financial alerts being triggered
  4. record-keeping failures

(b) from a safer gambling perspective:

  1. significant deposits of funds by customers (and in at least one case, loss of the same after gambling aggressively) within short periods of time without any (or any meaningful) interaction taking place
  2. failure to consider the increased risk of gambling harm to customers who display high levels of spend, having won large amounts of money gambling (although this has less regularly been cited by the Commission as a failing on the part of other operators)
  3. not following their own customer interaction procedures, resulting in ineffective customer interactions

The Commission’s announcement reads as follows:

Regulatory action against Buzz Group Ltd

A gambling business must pay a £780,000 fine after a Commission investigation revealed social responsibility and money laundering failures.

Buzz Group Ltd – which operates – has also received a formal warning for the failures which occurred between October 2019 and December 2020.

Social responsibility failures included:

  • financial triggers not sufficiently identifying at-risk players as they were set too high. One customer was able to deposit £22,400 in five days without the operator conducting a meaningful interaction within that period
  • systems not sufficiently identifying at-risk players. Two customers won large amounts of money gambling, yet the operator failed to consider the increased risk of gambling harm to those customers despite the customers displaying high levels of spend
  • not carrying out effective customer interactions with customers who gambled aggressively over short periods of time. One customer deposited and lost £12,400 during a six-day period but the operator’s only record of a customer interaction simply stated customer was ‘coping well in COVID-19’
  • once a decision to interact with a customer had been made staff did not always sufficiently follow the requirement of the operator’s own customer interaction procedure to check the customer was comfortable with their gambling levels, if they felt in control, and then discuss responsible gambling tools and support resources.

Anti-money laundering failures included:

  • triggers prompting source of funds (SOF) checks being over reliant on open source or anecdotal information such as staff relying heavily on assurances provided verbally by customers during interactions
  • in one instance the operator placed reliance on a large customer win as the SOF for the customer’s future gambling spend without considering that it might not be recycled winnings and that it may be the proceeds of crime
  • multiple alerts needed to be activated before a customer AML interaction took place. One customer was able to hit nine financial alerts before their account was suspended pending an AML interaction
  • the operator keeping insufficient records of AML interactions with customers and it was often not clear what had been discussed during those interactions.

The case against Buzz Group Ltd, like other recent enforcement action, was the result of planned compliance activity.

Helen Venn, Commission Executive Director, said: “As a regulator we expect all operators to effectively implement policies and procedures which make gambling safe and crime-free. Every single gambling business should be aware that we do check that these are in place and are being adhered to. If they are not, we will take action.”

The sanctions register entry (to which we have referred above) states as follows:

Buzz Group Limited

Decision date: 19 November 2021

Outcomes: Financial penalty and Warning

Details of action

Following a review of the operating licence undertaken against Buzz Group Limited (the Licensee), the Commission found that the Licensee:

  • breached paragraph 2 and 3 of licence condition 12.1.1. Anti-Money Laundering (AML) – Prevention of money laundering and terrorist financing
  • failed to comply with paragraph 1 of social responsibility code of practice (SRCP) 3.4.1 (Customer Interaction)
  • failed to act in accordance with the principles of ordinary code provision (OCP) 2.1.1 (Anti-money laundering)

In line with the Commission’s Licensing, compliance and enforcement policy statement, the Indicative sanctions guidance and the Statement of principles for determining financial penalties, the Commission has decided to:

  • impose a warning under section 117 (a) of the Gambling Act 2005 (the Act)
  • impose a financial penalty of £780,000.00.

The Licensee co-operated with the Commission throughout the investigation and took corrective steps to address the identified failings.