More Gambling Commission fines for operators

United Kingdom

Over the past two months, the Gambling Commission ("Commission") has announced in three decisions (here, here and here) further substantial fines against a number of online casino operators in relation to breaches of conditions of the operators’ respective licences relating to anti-money laundering ("AML") and the social responsibility codes of practice ("SRC"). The operators in question are:

  • Betit Operations Limited (t/a kaboo.com, highroller.com) ("Betit");
  • MT SecureTrade Limited (t/a guts.com, rizk.com) ("MTST");
  • Bestbet Limited (t/a Bestcasino) ("Bestbet");
  • Gamesys (Gibraltar) Limited ("GGL"); and
  • Platinum Gaming Limited ("PGL").

Betit

Betit was found to be in breach of the following provisions at the time of the Commission's assessment:

  • Licence Condition 1.2.1 and 15.2.1: the Commission found that an appropriately qualified individual occupying the information technology function did not hold a personal management licence (Licence Condition 1.2.1) and the Commission was not notified by way of a key event that the person previously occupying that position had left the company (Licence Condition 15.2.1).
  • Licence Conditions 12.1.1.1: the Commission found that Betit did not have a formal money laundering and terrorist financing risk assessment in place.
  • Licence Conditions 12.1.1.2 and 12.1.1.3: the Commission found that Betit had failed to establish and maintain appropriate risk-sensitive policies, procedures and controls relating to the management of its customers (including monitoring and management of compliance with such policies and procedures) to prevent money laundering and terrorist financing.
  • Licence Condition 12.1.2.1: the Commission found that Betit had failed to properly implement the measures described in Parts 2 and 3 of the Money Laundering Regulations 2007 (superseded by the Money Laundering Regulations 2017) in relation to requirements for operators based in foreign jurisdictions.
  • SRC provision 3.4.1: the Commission found Betit had failed to put into effect its own policies and procedures for customer interaction to help mitigate problem gambling.

As a result of the licence breaches, Betit must pay £1.4m by way of financial penalty and £18,732 towards the Commission’s investigative costs and has accepted further conditions in relation to its operating licence.

MTST

MTST was found to be in breach of the following provisions at the time of the Commission's assessment:

  • Licence Condition 12.1.1.1: The Commission found that MTST did not have a formal money laundering and terrorist financing risk assessment in place.
  • Licence Conditions 12.1.1.2 and 12.1.1.3: the Commission found that MTST had failed to establish and maintain appropriate risk-sensitive policies, procedures and controls relating to the management of its customers to prevent money laundering and terrorist financing.
  • Licence Condition 12.1.2.1: the Commission found MTST failed to put in place and implement the measures described in Parts 2 and 3 of the Money Laundering Regulations 2007 (superseded by the Money Laundering  Regulations 2017) in relation to requirements for operators based in foreign jurisdictions.
  • SRC provision 3.4.1: the Commission found that MTST did not make use of all relevant sources of information to ensure effective decision making, and to guide and deliver effective customer interaction.
  • Licence Condition 15.2.1: MTST failed to inform the Commission that a person was no longer carrying out the role of the MLRO and that another person had been appointed to the role.

As a result of the licence breaches, MTST must pay £592,333 in lieu of financial penalty and £15,301 towards the Commission’s investigative costs. MTST must also divest itself of £107,667 in connection with two customers and has accepted further conditions in relation to its operating licence.

Bestbet

Bestbet was found to be in breach of the following provisions at the time of the Commission's assessment:

  • Licence Condition 12.1.1.1: Bestbet acknowledged that, whilst it did have individual policies concerning AML in place, it did not have an appropriate AML risk assessment in place.
  • Licence Conditions 12.1.1.2 and 12.1.1.3: the Commission found that Bestbet had failed to establish and maintain appropriate risk-sensitive policies, procedures and controls relating to the management of its customers to prevent money laundering and terrorist financing.
  • SRC provision 3.4.1: the Commission found there were significant limitations in Bestbet's ability to proactively identify and mitigate risk.

As a result of the licence breaches, Bestbet must pay a financial penalty of £230,972 and £15,000 towards the Commission’s investigative costs and has accepted further conditions in relation to its operating licence.

GGL

GGL was found to be in breach of the following provisions of the Money Laundering Regulations 2017 in respect of three customers:

  • Regulation 8: failure to conduct ongoing monitoring of a business relationship, including scrutinising the transactions undertaken by the customer throughout the course of the relationship.
  • Regulation 14: failure to apply, on a risk sensitive basis, enhanced due diligence measures and enhanced ongoing monitoring in situations which by their nature present a higher risk of money laundering.
  • Regulation 20: failure to establish and maintain appropriate risk sensitive policies and procedures.

In addition to the above, the Commission found GGL failed to have effective social responsibility interactions with the three customers in breach of SRC provision 3.4.1. For example, with respect to one of the customers, the Commission found that effective social responsibility interactions should have occurred when losses increased alongside increased gameplay, the customer becoming a top depositor and also meeting the daily threshold. 

As a result of the above, GGL agreed a divestment to reimburse identified victims of £460,472, a payment in lieu of a financial penalty of £690,000, and an undisclosed payment towards the Commission's investigative costs.

PGL

As regards PGL, the Commission's investigation focused on a customer who had been convicted of a £2m fraud and had been spending money through several gambling operators (PGL included, with whom he lost the sum of £629,420). In its management of the customer, the Commission found PGL were in breach of the following:

  • SRC provisions 3.4.1(1)(c) and e(i)-(ii): the investigation found this customer was displaying indicators of problem gambling such as high deposits and significant losses. In addition, the customer was gambling frequently, and often through the night. However, PGL failed to make use of the information it had on the customer, which the Commission found "particularly concerning" as he had been identified as a VIP customer.
  • Licence Condition 12.1.2: the Commission found that PGL was in breach of anti-money laundering provisions and had not complied with Parts 2 and 3 of the Money Laundering Regulations 2007 (superseded by the Money Laundering Regulations 2017) in respect of customer due diligence and enhanced due diligence. Whilst it had identified the player as a high risk player, it did not make adequate enquiries into the source of the customer's funds and had failed to apply enhanced due diligence on the customer. In addition, even though it did submit a Suspicious Activity Report in respect of the customer, the customer recommenced gambling with PGL five months later, incurring significant losses.  
  • Ordinary code provision 2.1.1: the Commission found that the operator failed to act in accordance with the Commission advice and guidance in requiring them to comply with the Money Laundering Regulations 2017 as its policies and procedures were not fit for purpose.

As a result of the above, PGL agreed a regulatory settlement package including a divestment of the gross gambling yield of £629,420 it received from the gambling of the customer, a payment in lieu of a financial penalty of £990,200, and a payment of £9,800 towards the Commission's investigative costs.

Comment

The first three penalties form part of an ongoing investigation into the online casino sector in which over the last 18 months, the Commission has conducted an assessment of, or engaged with, 123 online operators. These penalties follow those announced in November 2018, when three companies paid nearly £14m in penalty packages due to failing to put in place effective measures to prevent money laundering and to ensure the safety of consumers from gambling-related harm.

The last two penalties arose after investigations were conducted following specific reports of questionable activity.

The investigations undertaken by the Commission and the level of fines imposed or agreed underline the importance of both maintaining adequate and up to date policies and ensuring sufficient resources are devoted to ongoing compliance. The Commission has made clear that where it sees failings in these areas it will take action, seek appropriate disinvestments and impose onerous fines.