Its accompanying remarks – that describe seemingly disgraceful conduct on the part of a former UK licensed gambling operator – are set out below:
The Commission has published the conclusion of an investigation into gambling business International Multi-Media Entertainments Limited (IMME).
IMME had provided facilities for the betting on the outcome of international lotteries under a real event betting licence, obtaining custom by calling consumers and hosting its website lotteries.com.
IMME also currently run a lottery syndicate business which does not require a licence. This side to IMME’s business is reliant on staff calling consumers and using the thelotterycentre.com website for its digital marketing.
Following concerns raised about the way the business was conducted the Commission suspended IMME’s operating licence and launched an investigation.
This revealed significant suitability, social responsibility and money laundering failures.
Suitability concerns included:
- customers complaining of being called repeatedly by IMME sales agents, including one customer in her 90s who was called several times a week. Another complainant stated that a Lotteries.com customer was called every 30-40 minutes, five or six times until the phone was answered
- 75% of its customers were over 60 years old and 20% were over 80 years old. This demographic seems disproportionately focused on older people and IMME had not considered the potential vulnerabilities of their customer base
- multiple complaints by consumers to the police and Action Fraud about IMME’s products
- call centre staff using aliases which raises the question as to why a staff member might be told to or choose to be dishonest about their real name.
Social Responsibility failings included:
- IMME was unable to evidence adequate safer gambling interactions with its customers to the Commission
- there were no records of interactions with a customer (78 years old) who spent £63,951 in just over three months
- one customer (74 years old) was allowed to deposit £9,379 in eight days without an adequate responsible gambling interaction.
Money laundering failures included:
- one customer, who was 100 years old at the time the Commission review was started, bet £23,839 in just five months. His deposits more than doubled from £2,992 in September 2018 to £6,090 in October 2018 and continued to rise but IMME did not obtain source of funds evidence
- IMME knew that two of its top depositors were retired postmen but allowed one to bet £20,345 in five months and other to bet £16,207 in six months without obtaining further information to support that level of spend.
Helen Venn, Commission Executive Director, said: “We will not tolerate gambling businesses behaving in the way IMME did. Gambling operators in Britain must follow our social responsibility and anti-money laundering rules, and a failure to do this will lead to us taking tough action. We suspended IMME’s licence following initial concerns and – having delved even deeper into the business’s activities – discovered failures that would have inevitably led to complete licence revocation had the operator not surrendered it. There is no room in Britain’s gambling industry for operators who fail in the way IMME have.”
In terms of background, having commenced a licence review on 17 January 2020, the Public Statement records that the Commission:
- decided to suspend IMME’s operating licence in March 2020 due to concerns regarding the risk presented by the licence holder’s management of the business, continued compliance issues and a lack of insight into the Commission’s concerns and
- thereafter reached a preliminary decision that it was minded to revoke the operating licence.
IMME decided to challenge the Commission’s preliminary decision at a Regulatory Panel hearing, which was scheduled to take place on 27 and 28 October 2021. However, on 22 September 2021, IMME surrendered its operating licence.
The Public Statement goes on to provide the following information:
In line with our Statement of principles for licensing and regulation and our Licensing, compliance and enforcement under the Gambling Act 2005: policy statement, the Commission decided to determine the facts of the case and publish the findings of the investigation, as we consider that there are wider lessons to be learned by the industry about the failings we identified.
The Commission’s investigation found that IMME failed to comply with the Licence conditions and codes of practice (LCCP), specifically:
- Licence condition 4.2.1 (disclosure to customers)
- Licence condition 7.1.1 (fair and transparent practice)
- Licence condition 8.1.1 (display of licensed status)
- Licence condition 12.1.1 (Anti-money laundering, prevention of money laundering and terrorist financing)
- Licence condition 15.1.2 (reporting suspicion of offences)
- Licence condition 15.2.1 (reporting key events)
- Licence condition 15.3.1 (general and regulatory returns)
- Licence condition 17.1.1. (customer identity verification)
- Social Responsibility Code provision 3.1.1 (combating problem gambling)
- Social Responsibility Code provision 3.3.4 (remote time out facility)
- Social Responsibility Code provision 3.4.1 (customer interaction)
- Social Responsibility Code provision 5.1.6 (compliance with advertising codes)
- Social Responsibility Code provision 5.1.9 (other marketing requirements)
- Social Responsibility Code provision 7.1.2 (responsible gambling information for staff)
- Ordinary Code provision 1.1.1 (licensing objectives)
- Ordinary Code provision 3.4.2 (customer interaction)
- Ordinary Code provision 3.5.4 (self-exclusion).
The Commission also made further adverse findings regarding:
- the financial circumstances of IMME
- IMME’s resourcing and structure
- the overlap between licensed and non-licensed gambling products.
The Commission has further questioned the integrity of IMME with regard to:
- its marketing practices
- misclassification of the gambling product
- IMME’s engagement with the Commission
- consumer complaints.
International Multi-Media Entertainments Limited (IMME) Key findings
The investigation found, in summary:
- failings in IMME’s anti-money laundering (AML) policies, procedures and controls
- failings in its responsible gambling policies, procedures, controls and practices, and
- suitability concerns.
AML policies, procedures and controls
IMME’s licence and the Money Laundering Regulations 2017 require operators to establish and maintain policies to manage effectively the risks of money laundering and terrorist financing. Officials found IMME’s anti-money laundering policies were deficient as the investigation found:
- a lack of documentary information to evidence source of funds (SOF) of any of the customer profiles assessed by Officials, despite substantial monthly deposits. IMME knew very little about the source of its customers’ funds throughout their active membership. IMME did not acknowledge the risks highlighted by some customers reviewed by Officials, including a customer who deposited £15,417.60 in one month
- one customer, who was 100 years old at the time the review was commenced, bet £23,839.90 in just five months. His deposits more than doubled from £2,992 in September 2018 to £6,090 in October 2018 and continued to rise but IMME did not obtain SOF
- IMME’s top depositor bet £36k in six months, yet IMME failed to adequately verify the source of this customer’s funds
- data supplied by IMME showed two of its top depositors to be retired postmen, one of whom had bet £20,345.10 in five months (January to May 2019) and the other £16,207.70 in six months (January to June 2019) with insufficient further information requested to support that level of deposit.
Social responsibility code provision 3.4.1 requires licensees to interact with customers in a way which minimises the risk of gambling-related harm. The investigation found that IMME’s social responsibility policies and practices generally failed to comply with this Code provision.
The review found IMME was unable to evidence social responsibility measures being implemented effectively and exhibited a lack of understanding of the requirements. Some examples are set out below:
- IMME was unable to evidence adequate safer gambling interactions with its customers to the Commission
- Officials found no evidence that sales representatives, who contacted customers, were appropriately trained to be able to undertake a customer care approach under social responsibility requirements
- There were no records of interactions with a customer (78 years old) who spent £63,951 in just over three months between September and December 2019. It was of particular concern that the Commission was informed by the customer’s brother that deposits were withdrawn from his bank account by IMME whilst he was in hospital and later, a care home. He also noticed some transactions took place shortly before his brother’s death. This prompted him to raise a fraud complaint with the bank and IMME
- One customer (74 years old) was allowed to deposit £9,379 in eight days without an adequate responsible gambling interaction
- The review found failings in relation to certain marketing requirements, including the fact that the Lotteries.com website claimed that when customers were betting on a lottery, the Licensee contributed to underlying good causes. At the assessment, IMME stated this was a remnant from its previous licence and agreed to remove this banner from the website
- It was not clear to consumers that they were betting on a lottery and not entering a lottery. IMME erroneously linked labels and tags to its website which suggested customers would be purchasing lottery tickets or playing actual lotteries as opposed to betting on the outcome.
The review found serious concerns regarding IMME’s suitability, including, but not limited to:
Extensive evidence of widespread breaches.
Failure to work with the Commission in an open and cooperative way including:
- consistent failure to meet deadlines for provision of material during the review
- failure to disclose all relevant material requested during the review.
Concerns regarding IMME’s customer base and its marketing practices
- Figures provided by IMME showed 75% of its customers were over 60 years old and 20% were over 80 years old. This demographic seems disproportionately focused on older people and IMME had not considered the potential vulnerabilities of their customer base.
Concerns regarding IMME’s business and financial structure.
Officials found there was insufficient clarity between the two different products offered by IMME, both in terms of finances and governance
- IMME’s business structure appears to lend itself to overlap between two of the products offered by it, i.e. the licensed gambling product (Lotteries.com) and the non-licensed product offered under the brand name “The Lottery Centre” (Lottery messenger service selling Lottery tickets for foreign lotteries under a syndicate arrangement). Both products are offered by IMME. The Commission found every one of IMME’s top 20 depositors were, or were previously, Lottery Centre customers.
- The monies for both The Lottery Centre and Lotteries.com were found not to be adequately segregated
- Key persons demonstrated a lack of knowledge and understanding throughout the Commission’s engagement during assessments, meetings and the review
- IMME’s customer records appeared to be inaccessible by members of staff, making informed responsible gambling interactions and internal decision making difficult. For example, paper customer records were stored at one location but were not accessible to IMME’s sales agents making marketing calls from other parts of the world. This is despite the fact IMME operated a remote business
The review found that there were multiple complaints to the police and Action Fraud about IMME’s products. Some complaints named the Lottery Centre but the Commission found that the complainant was actually a customer of the gambling product Lotteries.com, but were unaware what service they were actually paying for
In addressing one complaint, IMME accepted that its call centre agents did not use their real names. The Commission was deeply concerned that any of IMME’s staff might resort to using an alias since this significantly diminished trust in IMME and its methods. This also raised questions as to why a staff member might be told to or choose to be dishonest about their real name
Evidence of customers complaining of being called repeatedly by IMME sales agents, including one customer in her 90s who was called several times a week. Another complainant stated that a Lotteries.com customer was called every 30-40 minutes, five or six times until the phone was answered.
IMME appeared unwilling to accept that customers were making complaints about its products. IMME’s approach throughout the review was to discredit the complaints or complainants and question their integrity rather than to provide evidence to dispute statements of complainants.
Evidence from the National Trading Standards (NTS) Scams Team showed that many of IMME’s top 20 depositing customers were identified on an NTS database that identified consumers who have been targeted on multiple occasions and replied to mailings. Some of these customers were recorded by NTS as having been targeted by scammers on multiple occasions and also identified on known or convicted scammers’ data lists as replying. IMME claimed it had referred many of its top 20 depositing customers to the NTS itself, and it maintains that this explains the crossover between IMME customers and persons on the NTS’s database.
International Multi-Media Entertainments Limited (IMME) Regulatory outcome
IMME not [sic?] surrendered its operating licence
As a result of the above findings, had IMME not surrendered its operating licence, the Commission would have revoked its operating licence under section 117(1)(f) and section 119(1) of the Act.
In particular, the Commission considers the following conditions set out under section 120 (1) which applied to this case, namely:
- IMME had been carrying on the licensed activity in a manner inconsistent with the licensing objectives (section 120(1)(a)), namely the objectives to keep gambling from being a source of, or associated with, crime and disorder, and protecting children and other vulnerable persons from being harmed or exploited by gambling
- conditions of the licence had been breached (section 120(1)(b)), and
- IMME is unsuitable to carry on the licensed activities (section 120(1)(d)).
In accordance with section 120(3) in considering a licensee’s suitability for the purpose of subsection (1)(d) the Commission may, in particular, have regard to:
- the integrity of the licensee
- the competence of the licensee
- the financial and other circumstances of the licensee.
By reference to our Indicative sanctions guidance (June 2017) at section 2.29 we found that revocation would have been appropriate as the findings set out above demonstrated IMME was unsuitable to hold a licence for the following reason:
- there had been serious breaches of the Commission’s Licensing Conditions and Social Responsibility Codes of Practice
- what happened seriously affected consumers, either deliberately or through incompetence
- there was a continuing risk that what happened would be repeated
- persistent lack of insight into, or understanding of, the seriousness of what happened, the reasons that led up to a problem or the consequences.
International Multi-Media Entertainments Limited Good practice
Gambling operators should take account of the failings identified in this investigation to ensure industry learning. Operators should consider the following questions:
- Do you have formal processes in place to measure the effectiveness of your AML and safer gambling policies and are findings adequately recorded?
- Do you efficiently record all compliance-related decisions and are you able to demonstrate to the Commission, on request, evidence of ongoing assessment, evaluation and improvement?
- Do lessons learned from public statements flow into your policy and processes?
- Are your customer risk profiles formed by or linked to your money laundering and terrorist financing risk assessment?
- Do you have a formalised process for analysing the effectiveness of customer interactions to ensure that reviews were adequately documented and consistent in their approach?
- Do you log the types of behaviour which have triggered a customer interaction and keep sufficient records of interactions, along with decisions not to interact especially in terms of the level of detail provided?
- Do you have out of hours arrangements in place?
- Have your staff received sufficient AML and SR training?