EU Lotto fined for AML and social responsibility failings

The Gambling Commission has announced that, on 2 September 2021, it (a) imposed a £760,000 fine on, (b) added further conditions to the operating licence of and (c) issued a warning to EU Lotto Limited (operator of Lottoland) after an investigation by the regulator revealed AML and social responsibility failings of a similar type to those discovered in numerous previous cases.

In those circumstances, some may consider the penalty imposed by the Commission on EU Lotto to have been relatively light.

The Gambling Commission’s announcement reads as follows:

Regulatory action against EU Lotto

23 September 2021

A gambling business must pay a £760,000 fine and undergo extensive independent auditing after a Commission investigation revealed social responsibility and money laundering failures.

EU Lotto – which operates the website – has also received a formal warning for the failures which occurred between October 2019 and November 2020.

Social responsibility requirement failures included neglecting to take into account the Commission’s formal customer interaction guidance.

Examples included:

  • customers frequently changing deposit limits not being considered as markers of harm
  • no evidence of suitable financial and affordability assessments being conducted to identify whether a customer was being harmed or at risk of harm
  • customer interactions predominately consisted of an email detailing the responsible gambling tools available and did not require a customer response – there was little evidence of interactions being adapted depending on the extent of potential harm.

Anti-money laundering failures included:

  • not effectively reviewing or analysing bank statements provided by customers to prove address
  • not restricting customer accounts following source of funds (SoF) requests
  • allowing customers to register third-party debit cards (such as those in a different name to the customer) to their account
  • relying too heavily on ineffective threshold triggers and generally lacking information regarding how much a customer should be allowed to spend based on income, wealth or any other risk factors.

Helen Venn, Commission Executive Director, said:

“This case, like other recent enforcement action, was the result of planned compliance activity. All operators should be very aware that we will not hesitate to take firm action against those who fail to meet the high standards we expect for consumers in Britain.”

The Commission’s regulatory sanctions register records the following in relation to the above:

Details of action

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

  • breached paragraph 1, 2 and 3 of licence condition 12.1.1. Anti-Money Laundering (AML) – Prevention of money laundering and terrorist financing 
  • breached paragraph 1 of licence condition 12.1.2. Anti-Money Laundering (AML) 
  • 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)
  • attach additional conditions to the Licensee’s operating licence under section 117(1)(b) of the Act 
  • impose a financial penalty of £760,000.00.

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

Responding to the above news, Lottoland CEO Nigel Birrell has said:

Lottoland is fully committed to ensuring the highest standards of compliance, including its anti-money laundering and social responsibility obligations in all of the jurisdictions in which it operates.

The Gambling Commission fine was related to legacy issues around some of our compliance controls which have now been addressed. Lottoland  has extensive compliance measures in place and we are confident that our current policies and processes meet all relevant standards.

Remedial action taken included significantly increased investment in our compliance function, more than doubling headcount, alongside a host of other initiatives including bringing in third party support, enhancing training and a review of key policies. In addition, we  recently committed to building our individual processes into an automated system to improve the system even further.