The Gambling Commission has this morning posted on its website news that non-remote casino operator Casino 36 (with casinos in Wolverhampton, Dudley and Stockport) has incurred a £300,000 penalty package for AML and social responsibility failings.

As has been the case with other casino operators (both land-based and online) in the past, the Commission found that Casino 36 had failed to ensure:

• that adequate customer Enhanced Due Diligence (“EDD”), Source of Funds (“SoF”) and Source of Wealth (“SoW”) checks were carried out for 33 customers and
• that sufficient customer interaction was taking place when customers were potentially displaying signs of suffering gambling harm.

A regulatory settlement was agreed following commencement by the Commission of a review of the operating licence held by Casino 36. The sum of £300,000 comprises:

• £147,741 divestment of monies received from 33 customers who, between 10 November 2017 and 8 October 2018, were allowed to gamble significant sums of money in Casino 36 without adequate EDD, SoF and SoW checks being conducted, and
• £152,259 payment in lieu of a financial penalty, which the Commission would have otherwise imposed for breaches of a licence condition/social responsibility code

Casino 36 is also paying £18,648 towards the Commission’s investigative costs.

In addition, personal management licence holders at Casino 36 must comply with the following additional licence conditions:

• Compile and put into effect a regular training needs analysis of all staff and provide training dependent on the role of individual staff members within three months from the date of the acceptance of this condition.  Thereafter, the Senior Director and Compliance personal management licence holder must conduct an annual training need analysis for all staff and act upon findings and be able to present findings to the Commission on request.
• Ensure all personal management licence holders (PML) and those staff in key positions (as defined in the LCCP) undertake outsourced anti-money laundering training. All such staff must undertake outsourced refresher training within three months from the date of the acceptance of this condition and annually thereafter.

Further additional new licence conditions require that Casino 36 must:

• Maintain enhanced due diligence (EDD) on its top 250 customers across the group within its customer profiling system. This will consist of the top 125 customers by drop and 125 customers by loss. This is to be conducted within six months from the date of the acceptance of this condition and conducted thereafter every 12 months. The findings of the review should be presented to the board and acted upon. Records are to be maintained and presented to the Commission when requested.

• Maintain an independent chairperson to the Licensee’s Compliance Committee to independently assess its internal controls and systems on at least an annual basis.

Casino 36 has also agreed to instruct external auditors to carry out an independent audit of the current top 100 customers, within six months. The external auditors and the terms of reference must be agreed with the Commission before appointment. The review must include a full review of the current top 100 customers of the client base and ensure full compliance in respect of EDD, SOF and SOW. A summary of the review and subsequent action plan, with timescales, to implement any recommendations must be reported to the Commission within one month of the audit being completed.

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

As a result of Casino 36’s failings stolen money could have flowed unchecked through their casino and vulnerable customers were placed at risk of harm. This is simply not acceptable. Operators have to understand their customer base. This can only be achieved if they know their customers and ask the right questions to meet both their anti-money laundering and social responsibility obligations.

The Public Statement published by the Commission (that can be downloaded below) states that “this case provides valuable learning for operators” and that they should consider the following ‘good practice’ questions:

1. Do you have policies and procedures in place to identify customers who may be experiencing or at risk of developing problems with their gambling?
2. Do you have systems in place to identify potential problem gamblers? Do these include appropriate trigger points for when the usual pattern of gambling becomes unusual (these should not be just financial)? How do you protect new customers (where a pattern of play cannot yet be established)?
3. Are your staff sufficiently trained to spot problem gamblers and know how to report concerns? Are there clear procedures once a concern has been raised?
4. Do you know your customer (KYC)? Are you gaining a holistic picture of the customer’s source of funds, particularly in relation to VIP customers?
5. Are you critically assessing assurances you receive as to source of funds?
6. Have you ensured you have clear, up-to-date, and fit for purpose AML policies and procedures available to all who require guidance?
7. Have you ensured your policies and procedures have been informed by our guidance on AML? Have you taken into account the Commission’s Money Laundering and terrorist financing risk assessment?

In recent years, we have been advising both remote and non-remote casino operators how to ensure that they do not find themselves facing a Gambling Commission investigation of the type conducted in relation to Casino 36. This has included conduct of independent audits of the type that Casino 36 will now be commissioning. The key issues in this case – adequacy of EDD (and associated SoW and SoF checks) and sufficiency of customer interactions – keep recurring. If you require expert advice in these areas, please do contact us as soon as possible:

• David Clifton – dc@cliftondavies.com 07703652525
• Suzanne Davies – sd@cliftondavies.com 07767666300