Another day, another regulatory settlement. After yesterday’s Mark Jarvis Public Statement and last week’s Rank Group Public Statement, the Gambling Commission has today announced that online gambling operator Paddy Power Betfair (“PPB”) is to pay £2.2million for failing to protect customers and stop stolen money being gambled.
The full terms of the penalty package are set out as follows in a Public Statement, that can be downloaded below:
- £498,508 divestment of the monies received
- £1,717,121 payment in lieu of a financial penalty, which [the Commission] would otherwise impose for breaches of a licence condition in accordance with [its] Statement of principles for determining financial penalties. [The Commission] will direct this money to work which accelerates delivery of the National Responsible Gambling Strategy
- Payment of £50,045 towards [the Commission’s] investigative costs.
In terms of background, an investigation by the Commission investigation revealed that PPB failed to:
- adequately interact with customers who were displaying signs of problem gambling and
- adequately carry out anti-money laundering checks.
Two of the customers were using PPB’s betting exchange and a further three were gambling using the operator’s online presence and retail premises.
Richard Watson, Gambling Commission Executive Director, has said:
As a result of Paddy Power Betfair’s failings significant amounts of stolen money flowed through their exchange and this is simply not acceptable. Operators have a duty to all of their customers to seek to prevent the proceeds of crime from being used in gambling. These failings all stem from one simple principle – operators must know their customer. If they know their customer and ask the right questions then they place themselves in a strong position to meet their anti-money laundering and social responsibility obligations.
The Commission advises operators to consider the following questions to avoid the same issues:
- Do you have policies and procedures in place to identify customers who may be experiencing or at risk of developing problems with their gambling?
- 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)?
- 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?
- 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?
- Are you critically assessing assurances you receive as to source of funds?
- Have you ensured you have clear, up-to-date, and fit for purpose AML policies and procedures available to all who require guidance?
- 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?
Like the Rank Group and Mark Jarvis regulatory settlements before it, this PPB failing included a breach of LCCP Social Responsibility Code Provision 3.4.1. As we reported in February 2018, the Gambling Commission has published specific Customer interaction guidance for remote gambling operators that all remote gambling operators would be very well-advised to read (or re-read) now.
In the case of PPB, it also failed to act in accordance with the Commission’s guidance on anti-money laundering, The Prevention of Money Laundering and Combating the Financing of Terrorism – Guidance for remote and non-remote casinos. We are acknowledged as expert advisors to the gambling industry on AML/CTF issues, having conducted independent audits on such issues for a number of casino operators, and will be pleased to assist any operators requiring specialist advice/guidance on these and other regulatory issues.