On 11 July 2019, Casino 36 Limited (“Casino 36”) concluded a regulatory settlement with the Gambling Commission (the “Commission”) after Casino 36 was found to have breached both its Licence Conditions, specifically in relation to anti-money laundering and its Social Responsibility Code (the “SR Code”).
An investigation by the Commission revealed that Casino 36 had breached Licence Conditions 12.1.1(1), 12.1.1(2) and 12.1.1(3) and had failed to ensure that adequate customer enhanced due diligence, source of funds and source of wealth checks had been conducted. During the period from 10 November 2017 to 8 October 2018, £147,741 was received from 33 customers who were allowed to gamble significant sums of money without the appropriate checks being carried out. Richard Watson, Executive Director of the Commission, commented that it was “unacceptable” that due to these failings “stolen money could have flowed unchecked though their casino and vulnerable customers were placed at risk of harm.”
Under SR Code provision 3.4.1(1), Casino 36 were required to ensure that there was sufficient client interaction when customers were potentially displaying signs of problem gambling. The Commission found that Casino 36 had failed to identify and interact with such customers and as such were in breach of the SR Code. Richard Watson highlighted the importance of operators knowing their customers and asking “the right questions to meet both their anti-money laundering and social responsibility obligations.”
Casino 36 have responded by acknowledging that their policies relating to the Licence Conditions and the SR Code were ineffective at the time of the investigation and that they have already evolved those policies and the process remains ongoing as they are committed to working with the industry to raise standards, particularly in relation to safer gambling.
As a result of the breach, Casino 36 have agreed as part of the settlement to:
- Divest the £147,741 received from customers during the investigation
- Make a payment of £152,259 in lieu of a financial penalty which is imposed for breaches of a licence condition or the social responsibility code.
- Make a payment of £18,648 towards the Commission’s investigative costs
Along with the financial penalty, Casino 36 must undertake extra training and will have additional specific conditions added to its licence as follows:
- Training
Within three months, Casino 36 must put into effect an analysis of what training its employees need, provide training dependent on the role of individual staff members and then continue to maintain this procedure annually. Any findings must be available to present to the Commission upon request.
Moreover, within the same time frame, Casino 36 must ensure that all personal management holders and all staff in key positions must undertake outsourced anti-money laundering training and continue to take a refresher course annually.
- Enhanced Due Diligence
Within six months, Casino 36 must conduct Enhanced Due Diligence on its top 250 customers within its customer profiling system and then continue to maintain this procedure annually.
The findings of the review should be presented to the board, acted upon and filed so that the records can be presented to the Commission when requested.
- External Auditors
Within six months, Casino 36 must instruct external auditors, with terms of reference agreed with the Commission before appointment, to carry out an independent audit of its top 100 customers.
A summary of the review and subsequent action plan, with timescales, to implement any recommendations must be reported to the Commission within one month of the audit being completed.
Comment
The Commission has made clear that operators need to ensure that the controls they have in place are adequate, up to date and take into account current Commission guidance. In the case of Casino 36, there had been continued engagement with the Commission over a prolonged period, during which, the Commission was concerned that the repeated guidance given was being ignored. Other operators should ensure that any guidance provided by the Commission is effectively implemented.
Operators also need to take notice of similar failings by other operators and ensure that they don’t have any clear lack of governance and oversight of the compliance function, as such breaches will place them in a precarious position and will likely lead to the Commission undertaking an investigation.
The Commission found that Casino 36’s breach was replicated across its entire estate, where there was a lack of cohesion regarding their policies and procedures, poor levels of communication with no control sheets or mandatory obligations for policies and procedures to be updated. It should be noted that all operators need to have the appropriate measures in place to ensure that their anti-money laundering and social responsibility policies are effective and are being followed to the same standard across their estates.
One significant aspect of the regulatory settlement was the provisions regarding training, due diligence and external auditors. These in particular underline the extent to which the Commission may within the context of a regulatory settlement impose operational requirements on operators to address matters of concern.
The link to the full ruling can be found here.
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