The Gambling Commission has announced this morning that Ladbrokes Coral Group – comprised of Ladbrokes Betting and Gaming Limited (Ladbrokes) and Coral Interactive (Gibraltar) Limited (Coral) – is to pay £5.9million for past “systemic” failings in anti-money laundering and social responsibility that occurred prior to its acquisition by GVC, that completed on 28 March 2018.

Investigation is continuing into the role that PML holders played in the failings. As reported by us in November 2018, The Commission’s CEO, Neil McArthur, said: “Anyone in a position of authority needs to be aware that we will not only act against businesses when we take regulatory action – we will also hold individuals to account where they are responsible for an operator’s failings”.

The announcement reads as follows:

Systemic failings at the Ladbrokes Coral Group has led to a penalty package including a series of improvement measures that must be implemented by new owner GVC and a £5.9m payment, while further investigations into the actions of Personal Management Licence holders continue.

An investigation by the Gambling Commission found between November 2014 and October 2017 Ladbrokes and Coral failed to put in place effective safeguards to prevent consumers suffering gambling harm and against money laundering, with this failing continuing after their merger as the Ladbrokes Coral Group.

As a result the following occurred:

• Ladbrokes did not carry out any social responsibility interactions with a customer who lost £98,000 over two-and-a-half years, had 460 attempted deposits into their account declined, and even asked the operator to stop sending promotions.
• Despite one customer spending £1.5m over two-years 10 months, Coral did not ask the customer to evidence their source of funds and could not provide evidence of any social responsibility interactions being carried out. During their time with the operator the customer displayed signs of problem gambling including logging into their account an average of 10 times a day for a month and losing £64,000 in one month alone.
• Ladbrokes could not provide any evidence of carrying out social responsibility interactions with a customer who deposited over £140,000 in the first four months of their account being open.
• Ladbrokes, having identified concerns with a customer, then allowed further significant gambling without taking additional steps to verify the source of funds or consider if the customer could afford to spend and lose that amount of money. 

Richard Watson, Commission Executive Director, said: “Decision makers at gambling businesses need to invest in the welfare of their customers and the integrity of money being gambled with.

“These were systemic failings at a large operator which resulted in consumers being harmed and stolen money flowing though the business and this is unacceptable.”

As part of this settlement the Ladbrokes Coral Group’s new owners GVC will pay £4.8m in lieu of a financial penalty and will divest £1.1m gained from customers as a result of its failings. GVC will also review the top 50 customers for the years 2015-2017 to consider whether any further failings can be identified, and if so they will divest themselves of profit accordingly.

GVC has committed to making a number of improvements to the business including overhauling its responsible gaming and customer interaction processes, retraining staff, and hiring new staff.

The Gambling Commission is still making enquiries into the role Personal Management Licence holders played in these failures.

The Public Statement published by the Gambling Commission, setting out the full terms of the regulatory settlement, can be downloaded below.

In terms of learning to be derived from this latest in a long series of enforcement actions by the Commission for AML and customer interaction failings, the Public Statement lists a number of (1) aggravating and (2) mitigating factors to which it had regard when considering an appropriate resolution to its investigation, namely:

• Aggravating factors
  • The duration of the breach, being almost three years.
  • The systemic nature of the breach and the potential this may mean other customers were affected that the Commission is as yet unaware of.
  • Learning published by the Commission during the time of the breach regarding the same issues.
  • Repetition of breaches previously identified by the Commission in engagement with Coral Interactive (Gibraltar).
  • The need to encourage compliance by other operators with these requirements.
  • The breach continued at Ladbrokes after problems with the AML monitoring process were discovered.
  • Ladbrokes Coral Group’s management were likely to have been aware of, and if not, should have been aware of, the problems that lead to the breaches given their significance.
  • Initial remedial actions put in place by Ladbrokes were not to improve resources but to reduce the number of high-risk customers identified.
  • The customers who held accounts with Coral were not identified during our previous engagement.
• Mitigating factors
  • GVC has now put in place new resources, policies and PML holders, and is engaging with the Commission regarding improvements being implemented.
  • GVC has taken steps to remedy the breaches and have outlined project work it will be undertaking.
  • GVC has fully cooperated with the Commission’s investigation.
  • There is no evidence of any attempts to conceal the breaches.
  • The breaches identified were not due to the absence of controls, rather their ineffectiveness due to a lack of adequate resourcing.
  • A payment in lieu of financial penalty of £1m has previously been made by Coral Interactive (Gibraltar) in recognition of breaches during this time period.

In terms of good practice, the Commission recommends that gambling operators should take account of the failings identified in the investigation into Ladbrokes Coral Group in order to ensure industry learning by means of consideration of the following questions:

• Are your policies and procedures for identifying high risk customers for AML and SR effective?
• Have you adequately resourced your AML and SR departments, so your staff are able to put your policies and processes in place for all customers at all times? 
• Are you recording all customer interactions, including decisions not to interact with customers, and are these records available for colleagues to refer to when making decisions?
• Are your customers providing documentation to support their level of spend and loss, and not simply giving verbal or email assurances, for example?