Last week, the Gambling Commission for the first time published a report on its enforcement work over the preceding financial year.
The aims of the report are to:
- Provide an overview of the enforcement work of the Gambling Commission.
- Highlight areas of regulatory concern.
- Bring together lessons that are frequently published in its public decision notices.
- Help the industry to raise standards and improve overall regulatory compliance.
The report is separated into the key enforcement themes which the Gambling Commission has been most actively engaged in in the past year, which are: anti-money laundering, customer interaction, self-exclusion, unfair terms and practices, marketing and advertising and illegal gambling.
The report reveals that the Gambling Commission instigated 22 investigations earlier this year into remote casino operators following a broad compliance audit, which are said to be ongoing. The Gambling Commission expressed its concern at the number and range of AML issues identified.
If operators need any incentive or encouragement to read the report, then it is perhaps the introduction from the Gambling Commission which says:
"Licensees are on notice that a failure to adhere to the guidance in both this document and within our public decision notices may see us bringing enforcement action more swiftly and with greater penalty if we are of the view lessons are not being learned, or if the issue in question has been uncovered by us or another authority. Similarly, operators can expect lesser penalties if they report the matter to us promptly, cooperate during our investigation and proactively look to rectify matters."
Guidance on Good Practice
For each area of regulatory concern, the Gambling Commission provides a health check and its guidance on good practice (see below).
If operators want to avoid being the subject of a(nother) Gambling Commission investigation, licence review or financial penalty they would be well advised to carefully consider each of the following questions:
- Have you allocated sufficient resources to AML compliance?
- 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 the Commission’s guidance on AML? Are you assuming that if you comply with the AML requirements of another regulator you are in compliance with the Commission’s requirements? Have you taken into account the Commission’s Risk Assessment?
- Have you ensured staff have and continue to receive proper training on AML matters?
- Are you supporting your nominated officers with the appropriate resources and do they have the authority to operate objectively and independently?
- Are your systems and controls appropriate for your business?
- Do you regularly assess the adequacy of your systems and controls?
- 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?
- Are you making records of customer interactions and transactions where necessary?
- Is your approach governed by risk? Once an alert has been raised, do you have in place procedures to ensure the case is properly reviewed in a timely manner? Will decisions be appropriately recorded?
- Are you confident commercial considerations do not outweigh your adherence to the terms of your licence?
- Is risk being ‘owned’ at an appropriately senior level within your organisation?
- Do you have policies and procedures in place to identify customers who may be experiencing or at risk of developing problems with their gambling? Have you allocated sufficient resources to be able to interact with customers early and effectively when you have concerns?
- Are you curious about your customers? Do you monitor customer activity? Do you record interactions?
- Do you track customers across your different platforms and do enough to spot multiple customer accounts?
- 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)?
- Will your processes keep pace with increased demand? Will your growth or any merger affect your ability to monitor customers?
- How are you evaluating these measures and procedures to ensure they are effective and how do you plan to make improvements over time?
- 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?
- Where concerns arise, are you able to intervene early and engage with a customer?
- Do your customer interaction policies and procedures also cover VIP customers? Are you alert to the particular risk these customers bring? Are commercial considerations overriding customer protections?
- Are you allocating sufficient resources to ensure your self-exclusion polices are compliant?
- Are your systems sufficiently robust? How many details would a self-excluded customer need to change in order to open a duplicate account with you? Can your systems pick up on simple case changes?
- Do you perform holistic reviews of your customer base and make use of all information available to you, including complaints, to protect self-excluded customers?
- If a customer self-excludes from one of your websites, brands or products, are you satisfied this self-exclusion will be applied across all of these (unless the customer requests for a limited self-exclusion)?
- How promptly are details of self-excluded customers removed from your marketing databases? Are your data sets ring-fenced to prevent access to self-excluded customers’ details for marketing purposes? Does this also include marketing affiliates, for which you have responsibility?
- How responsive are you when things go wrong to enable prompt investigation and provide an appropriate remedy?
Unfair Terms and Practices
- Have you read the guidance on consumer law (Unfair contract terms: CMA37 and Consumer Protection from Unfair Trading Regulations – traders: OFT1008) and the material relevant to gambling sector published by the CMA (Do’s and don’ts for online gambling companies and Further information for online gambling companies which relate to the specific compliance issues they have addressed in their investigation)? Have you taken any legal advice on this?
- Have you reviewed your practices (and made necessary changes) to ensure terms and conditions are in line with consumer protection law?
- Are you allocating sufficient resources to the creation of fair contractual terms and to assess how you treat your customers? Do you have sufficient in-house knowledge to ensure compliance in this area?
- Have you embedded changes to ensure compliance with consumer protection law in internal policies, guidance and training materials for employees? For example, are those handling complaints sufficiently trained on consumer protection issues?
- Are you satisfied that you are acting in accordance with your terms?
- Do you ensure that an accurate summary of contractual terms on which gambling is offered is available to customers and is set out in plain English?
Marketing and Advertising
- Do your marketing and advertising materials comply with the BCAP and CAP codes, and the licence conditions and codes or practice? If in doubt, have you made use of CAP’s copy advice team?
- Are your advertisements clear and fair? Do your marketing communications include significant limitations and qualifications consumers should be aware of?
- Are you confident you have control over your marketing materials once you have engaged marketing affiliates? Have you ensured your contractual terms with affiliates are robust? Are you conducting regular audits of your affiliates’ activity against your compliance policy?
- Are you allocating sufficient resources to ensuring your marketing and advertising is compliant?
- Is responsibility for marketing and advertising being owned at an appropriate level within your organisation?