Gambling Commission imposes tougher licence conditions on three operators following AML and SR failings

The UK Gambling Commission has imposed tougher licencing conditions on BGO, GAN and NetBet after identifying social responsibility and anti-money laundering control failings.

The UK Gambling Commission has added new conditions to BGO, GAN and NetBet’s licences after the regulator identified failings in their social responsibility and anti-money laundering (AML) controls.

The regulator took action after conducting investigations into each business and as a result, two of the operators, BGO and Gan PLC, have had new conditions imposed on their licences and all three will now improve their policies and procedures as well as making payments to progress the work of the National Strategy to Reduce Gambling Harms.

BGO has agreed to pay £2m  towards the implementation of the National Strategy to Reduce Gambling Harms, while GAN  will make a £146,000 payment, and NetBet will pay £748,000.

Richard Watson, executive director at the Gambling Commission, said: “Licensees must protect consumers from harm and treat them fairly. Our recent investigations uncovered a variety of consumer protection and anti-money laundering failings at each of these three operators and as a result, we are using a range of enforcement tools against them.  We will continue to crack down on failing operators through our tough and proactive compliance and enforcement work.” 

The Commission said it will also review the actions of the individual Personal Management Licence holders in all three of these cases.

BGO’s case

The investigation into BGO was launched in September 2019 after conducting a compliance assessment in September 2018. During the assessment, the regulator discovered failings in how the operator interacted with customers from both a social responsibility and AML perspective.

The Commission found that the operator failed to implement effective policies and procedures for customers that displayed signs of problem gambling between 25 September 2018 and 23 March 2020, breaching social responsibility code provision 3.4.1(1).

BGO allowed customers to gamble six-figure sums of money without intervening, despite the customers hitting several triggers that should have prompted the operator to investigate. 

The operator also breached licence conditions 12.1.1(1), 12.1.1(2) and 12.1.1(3) by failing to conduct adequate source of funds tests and enhanced due diligence on customers that presented a greater risk of money laundering. In one instance, BGO failed to act when it found a customer was depositing more than five times their annual salary.

BGO has since taken action to address these failings. The Commission noted that the operator fully cooperated with the investigation and has agreed to apply enhanced due diligence measures to its top 250 customers, comprising the top 125 by deposit, and the top 125 by losses. This will be conducted in the next three months and then repeated every 12 months afterwards.

The operator will also track the effectiveness of these checks on its top 250 customers and findings will be presented to BGO’s board, and any action points addressed, and made available to the Commission when required.

On top of its £2m payment in place of a financial penalty, the operator will cover the £31,023.87 cost of the investigation.

GAN’s case

Looking at GAN, and its Winstar Casino brand, the UK regulator launched its regulatory review of the business in January 2020. The Commission found that between August 2018 and September 2019 GAN failed to have adequate AML safeguards and social responsibility measures in place.

GAN breached licence condition 12.1.1(1) as it did not conduct an adequate risk assessment of potential money laundering risks. This led to the operator breaching conditions 12.1.1(2) and (3) as it did not have adequate MAL safeguards in place, it also meant the operator did not conduct reviews of these measures breaching condition 12.1.2.

The lack of controls was demonstrated by a customer who had bank accounts in different names accepted as a source of funds proof. GAN also failed to conduct further investigation into a customer who used cryptocurrency assets as proof of funds.

GAN also failed to prominently display age waiting on its Winstar site, breaching Social Responsibility code provision 3.2.11. As the operator did not have provisions in place to intervene in instances where a customer displayed signs of problem gambling, the operator also breached code provision 3.4.1(1). 

GAN breached provision 5.1.6(1) of the social responsibility code as Winstar featured several game titles with cartoon imagery. While this was mostly removed in 2018, one title still had imagery that could appeal to minors. GAN attributed this to human error.

As a result of these breaches, GAN has been ordered to ensure all persons that hold the money laundering reporting officer or their deputy hold suitable qualifications, and a Personal Management Licence (PML). These people must also undergo annual refresher AML and counter-terrorist financing training.

The AML training extends to all PML holders, senior management and key control staff. 

GAN will therefore pay £146,754, with £100,000 going to the National Strategy to Reduce Gambling Harms, and a £46,754 divestment from customer accounts that was accrued as a result of its failings, that will go to the same body. The operator will also pay £6,000 towards the regulator’s investigation.

NetBet’s case

The last of the three operators, NetBet, was found to have breached licence condition 12.1.1 (3) which concerns the prevention of money laundering and terrorism financing. 

The regulator found that NetBet failed to conduct the appropriate levels of enhanced due diligence checks on at-risk customers, and in some cases, the operator made no checks. The operator also failed to consistently review source of funds documentation.

NetBet also breached provision 3.4.1 of the social responsibility code as it failed to have an adequate process for intervening when customers showed signs of gambling problems. The processes it did have were not properly followed by staff.

As a result of the investigation, the operator has made several changes which include monitoring the log-in times for customers during assessments. NetBet will log the effectiveness of its customer interaction and has also created an affordability calculator allowing customers to assess how much money they have available to spend.

The operator will also place automatic limits of customers that display early signs of problem gambling.

On top of its £748,000 payment, NetBet will pay £8,606 towards the Commission’s investigation costs.

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