Gambling Commission investigates online casinos

United Kingdom

The UK Gambling Commission (the “Commission”) announced last week that it has written to all online casino operators which it regulates raising concerns about the operators’ approach to anti-money laundering and social responsibility.

Anti-money laundering and social responsibility have been high on the Commission's agenda for some time with it imposing multi-million pound regulatory penalties on operators which the Commission considers are in breach.

The difficulty for operators is that it is not at all clear precisely what procedures are required by the Commission either in respect of anti-money laundering or social responsibility. 

As regards anti-money laundering, the Commission’s Licence Conditions and Codes of Practice (the “LCCP”) effectively impose the UK’s anti-money laundering legislation on operators - including operators situated outside the UK who would not otherwise have to comply with it.  In fact the LCCP still refer to the UK’s Money Laundering Regulations 2007 (the “2007 Regulations”), rather than the more recent 2017 Regulations, but that makes little difference here.

Under the 2007 Regulations as imposed via the LCCP, operators are obliged to undertake a range of requirements concerning customer due diligence and ensuring the legitimate source of funds of customers.  But what precisely this entails is far from clear.

Equally, as regards social responsibility, under the LCCP directly, operators are obliged to comply with a range of provisions for example to identify patterns of problem gambling and to undertake appropriate interventions where this appears to be taking place.  But again, what this entails is unclear.

There is a noticeable dearth of useful guidance from the Commission in respect of what it actually expects operators to do both as regards anti-money laundering and social responsibility.  The danger for operators is that if they do too much, this will become overly cumbersome for customers who may migrate to operators who do not take such a stringent approach.  However, if they do too little, this may leave them vulnerable to a finding of regulatory breach by the Commission and a substantial fine.

In any event, the issue plainly cannot be ignored by operators.  What is clear is that the Commission considers anti-money laundering and social responsibility to be matters of the highest importance.  Engaging effectively with the Commission is likely to be a key commercial and operational concern in the months ahead.