White Hat Gaming to pay £1.3m after Gambling Commission detects AML and social responsibility failings

An investigation by the Gambling Commission identified several money laundering and social responsibility failings with White Hat Gaming’s operations.

White Hat Gaming is to pay a settlement of £1.3m after an investigation carried out by the Gambling Commission identified a series of social responsibility and money laundering failures with the suppliers’ operations.

The investigation

In January 2020, the UK’s Gambling Commission informed White Hat that it was to carry out an investigation of its remote operating licence as part of the Commission’s ongoing compliance work.

The investigation focused on the suppliers’ handling of seven customer accounts following concerns highlighted in a compliance assessment from March 2019.

The regulator identified failings in how White Hat Gaming identified and managed customers who were at a higher risk of gambling-related harm and money laundering.

In its investigation, the Commission said that White Hat breached two licence conditions and a provision of the social responsibility code. These breaches were identified on the suppliers’ grandivy.com, 21casino.com, hellocasino.com and dreamvegas.com sites.

White Hat Gaming’s money laundering failings

The first breach of the licence condition related to condition 12.1.1 which encompasses the prevention of money laundering terrorist financing. Under Condition 12.1.1 (2) licensees must have policies and controls in place to prevent money laundering and terrorist financing, while 12.1.1 (3) states that the procedures must be implemented effectively, kept under review and revised where appropriate.

The supplier accepted it had breached this condition as its controls, policies and procedures to prevent money laundering were not appropriately implemented effectively.

In regards to the first breach, the Commission noted that one White Hat customer lost about £70,000 between March 2017 and January 2019. The gambling company acknowledged it had little knowledge of the customer’s financial situation which meant they should not have been allowed to continue gambling until a full customer review had been completed.

The Commission cited another instance where a customer lost £55,000 between May 2017 and March 2019. However, in this instance, the company filed a report which found that the customer deposited £30,000 after winning the cash at a land-based casino. 

Despite this, the regulator argued that White Hat failed to delve deeper into the source of the deposit as it did not request any additional information to confirm the customer’s story.

The investigation also found that White Hat breached licence condition 12.1.2, which outlines how licensees must operate in line with the UK’s Money Laundering Regulations of 2007 and 2017.

The Commission noted a weakness in the company’s anti-money laundering (AML) controls and breaches which mainly involved failing to keep full records of evidence and supporting documents. In addition to this, White Hat failed to carry out customer due diligence.

Social responsibility failings

Turning to the company’s social responsibility failings, the regulator found that White Hat was in breach of provision 3.4.1 of the social responsibility code. This requires licensees to have procedures in place for interacting with customers when they show signs of problem gambling.

The Commission found weaknesses in White Hat’s safer gambling controls, stating it did not have policies or procedures in place for customer interaction with specific provision for making use of all relevant sources of information.

The Gambling Commission cited an example where a customer lost about £70,000 within three months of opening an account. White Hat did create a customer intelligence report which found that the player apparently had a successful previous career and owned an expensive property without a mortgage.

However, the source of funds was not identified and the player’s account was not immediately locked. The regulator argued that White Hat put creating the report ahead of intervention which it said was wrong.

The regulator noted another example where a player lost £2,000 in a short space of time, triggering a customer interaction. Then 10 days later, the same individual gambled and lost £50,000 in six hours before self-excluding.

The regulator said that although the customer received four interactions, it found that the total amount lost by the customer showed that the interactions were not delivered effectively or in accordance with the social responsibility code.

The Commission noted another incident where a customer lost £85,000 within 85 minutes on the same day they opened an account with White Hat. The customer received four interactions advising them of the amounts deposited into the account and a higher level interaction which contained safer gambling messaging before the operator locked the account on the same day.

Again, the regulator said that the amount of money lost by the customer showed that the interactions were not delivered effectively in line with the code.

The outcome of the investigation

The Commission noted that White Hat complied with the investigation, accepted all of its failings and has committed to an ongoing programme of improvements.

This will include implementing backstop limits to automatically stop players from depositing more funds until certain checks have been compelled, improving how it gathers and uses information for checks and developing its scrutiny processes.

In lieu of financial penalty, White Hat has agreed to pay a settlement of £1.3m which will be delivered to the Commission’s National Strategy to Reduce Gambling Harms. White Hat will also pay £9,818.63 to cover the cost of the investigation.

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