GC fines Betway £11.6m for regulatory failings

Betway is the latest gambling company to receive a fine from the Gambling Commission.

The UK Gambling Commission has fined Betway a record £11.6m for a series of social responsibility and anti-money laundering (AML) failings linked to dealings with seven of the operator’s ‘VIP’ customers.

This news comes after the Commission fined the William Hill-owned Mr Green £3m for regulatory failings relating to social responsibility and anti-money laundering failings.

According to the Commission’s report, the online gambling business has been fined several regulatory failings relating to social responsibility and money laundering.  The investigation revolved around the activity of seven ‘VIP’ players between November 2014 and November 2017.

What did Betway do?

Over the course of the Commission’s investigation, the regulator said it identified “systematic historical failings” in how Betway identified and interacted with customers at a higher risk of problem gambling and money laundering.

The regulator said that the operator’s failings mainly came down to inadequate anti-money laundering measure and social responsibility policies as well as oversight from senior management. In its reports, the Commission said “Betway had ineffective controls to identify and interact with customers who may have been at risk of suffering gambling harm or money laundering.”

In one instance, Betway failed to carry out source of funds checks for a VIP customer who deposited £8 and lost more than £4m over a four-year period. There were 51 occasions in which Betway should have interacted with the customer, but the operator only reached out on 12 occasions. The player’s account was only closed after Betway was contacted by the police.

Another customer held 11 separate accounts with Betway and over one year and five months, deposited more than £490,000. The operator carried out 18 reviews of these deposits but failed to check the customer’s source of funds as the deposits did not trigger the financial thresholds in place at the time. This customer was eventually convicted of fraud.

In another instance, the operator failed to carry out adequate social responsibility interactions with a customer who had deposited and lost £187,000 over a two-day period. Another player deposited £1.6m and lost over £700,000 over a three-year period in which the player was also unemployed.

The Commission’s investigation found that due to a lack of consideration of individual customers affordability and failing to conduct source of funds checks, the online gambling company allowed £5.8m to flow through the business which has been found, or could reasonably be suspected to be, money generated from criminal activity. The majority of this money will now be divested and returned to the victims.

In terms of specific failings, the regulator found that Betway failed to identify problem gambling behaviour, was in breach of social responsibility code provision 3.4.1(1). This code provision requires licensees to have effective policies and procedures in place for customer interaction when there may be concern over their gambling habits.

Richard Watson, Executive Director at the Gambling Commission, said: “The actions of Betway suggest there was little regard for the welfare of its VIP customers or the impact on those around them. As part of our ongoing programme of work to make gambling safer we are pushing the industry to make rapid progress on the areas that we consider will have the most significant impact to protect consumers. The treatment and handling of high-value customers is a significant piece of that work and operators are in no doubt about the need to tackle the issue at speed.

“We have set tight deadlines for when we expect to see progress and if we do not see the right results then we will have no choice but to take further action. This case highlights again why progress needs to be made.”

Betway’s response

Betway acknowledged it had failed in its duties as it did not implement a customer interaction policy until April 2015 and did not have specific provisions in place for VIP customers until January 2017. Betway also accepted that its policies and procedures that were in place did not always prompt effective interaction with customers who were at risk.

The Commission’s investigation also identified weaknesses in Betway’s AML measures between 2014 and 2018 and found that online gambling company was in breach of several licence conditions.

Betway was in breach of licence condition 12.1.2 (1) which requires holders to have and implement specific measures required by the Money Laundering Regulations 2007 which are superseded by new regulations introduced in 2017. The Commission also found Betway to be in breach of licence condition 12.1.1 which relates to the prevention of money laundering and terrorist financing.

The operator agreed it had failed in its duties and said it did not conduct adequate ongoing monitoring of its business relationship with customers or apply enhanced customer due diligence when monitoring customers with a high spend. Betway also admitted that it had not kept full records of evidence and supporting documents form its due diligence checks nor did it implement policies to stop money laundering and terrorist financing.

Betway’s punishment

The regulator noted that Betway cooperated with its investigation and acknowledged the shortcomings in its policies and procedures. Betway is therefore required to pay £5.8m in lieu of a financial penalty which will be put towards the Commission’s National Strategy to Reduce Gambling Harms. A further £5.8m will be divested and used to help refund the victims in the case and Betway will cover the costs of the Commission’s investigation.

The operator will be required to undertake several business reviews which will include an independent review of its current policies, its operation, resourcing, quality control and oversight. Betway will also be subject to a compliance-led review of UK customers over the past six months.

Betway will also carry out a full assessment of its top 25 customers by gross gaming yield and top 25 customers by deposit for the years between 2015 and 2018 to identify any further failings. The operator is also required to review all new high or higher risk customers which may be identified by the Commission. On top of this Betway will conduct a review of the next 12-month compliance development road maps.

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