We can help gambling operators facing AML and SR issues and investigations

Today’s announcement of a £2million penalty package being imposed on 32Red for anti-money laundering (“AML”) and social responsibility (“SR”) failings underlines yet again the Gambling Commission’s frustration that gambling operators have still not learned from the failings of others in these respects as recorded in public statements dating back to 2013.

We have very considerable experience in advising operators within each of the betting, gaming and lottery sectors (both online and land-based) on their responsibilities in the above respects. This experience includes advising a number of operators who have been the subject of Gambling Commission investigations and/or regulatory settlements. With  view to staving off such investigations, we have also:

  • undertaken independent reviews of various operators’ AML (and associated SR) policies, procedures, systems and controls and
  • authored an AML Best Practice Guidelines document for members of one of the leading gambling industry trade associations.

We believe our experience in this field of work to be unrivalled currently.

Quite regardless of whether your business is a casino business that falls within the ambit of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, Licence Condition 12.1.1 (on page 22 of the LCCP) applies to all gambling operators licensed by the Commission (except gaming machine technical and gambling software licences). The first part of the licence condition states that:

“Licensees must conduct an assessment of the risks of their business being used for money laundering and terrorist financing. Such risk assessment must be appropriate and must be reviewed as necessary in the light of any changes of circumstances, including the introduction of new products or technology, new methods of payment by customers, changes in the customer demographic or any other material changes, and in any event reviewed at least annually”

It is evident from today’s public statement that 32Red had failed even to conduct such a risk assessment

The second part of licence condition 12.1.1 requires that:

“Following completion of and having regard to the risk assessment, and any review of the assessment, licensees must ensure they have appropriate policies, procedures and controls to prevent money laundering and terrorist financing”.

It is therefore your ML/TF risk assessment that will drive the content of your AML/CTF Policies and Procedures document. However, your AML/CTF Policies and Procedures will mean nothing if they are not implemented properly, bearing in mind that the third aspect of licence condition 12.1.1 requires that:

“Licensees must ensure that such policies, procedures and controls are implemented effectively, kept under review, revised appropriately to ensure that they remain effective, and take into account any applicable learning or guidelines published by the Gambling Commission from time to time”.

Insofar as associated SR aspects are concerned, we have previously reported on publication by the Gambling Commission of its “Customer interaction – guidance for remote gambling operators” which focuses on Social Responsibility Code provision 3.4.1 (on page 47 of the LCCP).

SR Code provision 3.4.1 applies to all operating licences, except non-remote lottery, gaming machine technical, gambling software and host licences. The first part of this provision requires that:

“Licensees must put into effect policies and procedures for customer interaction where they have concerns that a customer’s behaviour may indicate problem gambling. The policies must include:

(a) identification of the appropriate level of management who may initiate customer interaction and the procedures for doing so

(b) the types of behaviour that will be logged/reported to the appropriate level of staff and which may trigger customer interaction at an appropriate moment

(c) the circumstances in which consideration should be given to refusing service to customers and/or barring them from the operator’s gambling premises

(d) training for all staff on their respective responsibilities, in particular so that they know who is designated to deal with problem gambling issues

(e) specific provision for making use of all relevant sources of information to ensure effective decision making, and to guide and deliver effective customer interactions, including in particular

(i) provision to identify at risk customers who may not be displaying obvious signs of, or overt behaviour associated with, problem gambling: this should be by reference to indicators such as time or money spent

(ii) specific provision in relation to customers designated by the licensee as ‘high value’, ‘VIP’ or equivalent

(f) specific provision for interacting with customers demonstrating signs of agitation, distress, intimidation, aggression or other behaviours that may inhibit customer interaction”

In breach of SR Code provision 3.4.1, 32Red‘s social responsibility policies did not make any reference to customer interaction, the procedure to follow or the behaviours to log. Their policies and procedures also omitted certain specific provisions required to promote socially responsible gambling, in breach of SR Code provision 3.1.1(1).

We are aware that today’s public statement does not signal the end of the Gambling Commission’s investigations into other operators’ AML and SR failings. If this causes you concern in relation to your own business and you wish us to explain how we may be able to help, do please get in touch with: