GC slams licensees’ AML procedures as “not fit for purpose”

| By Nosa Omoigui
The GB Gambling Commission has published its Compliance and Enforcement report for 2020/21, highlighting shortcomings in anti-money laundering (AML) and social responsibility procedures over the past year.
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The regulator said the failings may have been caused by a prioritisation of profit over compliance.

“The reasons for these failings are almost as concerning as the failings themselves,” it said. “Our casework reveals that operators are either not making suitable resources available or are simply putting commercial objectives ahead of regulatory ones. This is simply unacceptable and will be seen as such by others in the industry who work hard to achieve compliance.”

The report cited a lack of due diligence as a major contributing factor to any failures regarding AML and CFT in particular.

This included having inadequate due diligence measures in place to begin with, failure to apply due diligence to circumstances where it should apply, and an over-reliance on third parties to carry out due diligence checks.

In addition, many operators’ thresholds for checks were too high and were based on single metrics rather than a more holistic picture.

Many operators were also shown to have “inadequate risk assessment methodology” in place for money laundering and terrorist financing, while also failing to consider how problem gambling could be linked to money laundering and terrorist financing.

The Commission cited a number of cases over the past year that involved inadequete checks, including when it fined Casumo £6m back in March after a player was allowed to lose £1.1m without a responsible gambling interaction.

Other examples were also used as case studies to show how AML practices were being overlooked.

These included a customer depositing £20,000 in cash on two separate occasions while providing false identification, another customer attempting to present sealed cash packets at one casino while lying that it came from another operator, and a member of an organised crime gang using money from cyber crimes in a high-end casino.

The report also expressed concern that operators were more worried about failures to comply with social responsibility guidelines coming across negatively in the press, when their primary concern should have been mitigating money laundering and terrorist financing risks in the first place.

The report reminded licensees that they are expected to comply fully with the terms of their licence “as relevant to anti-money laundering (AML) and counter terrorist financing (CTF)”. Casino licencees must additionally comply with the requirements of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, including amendments made by government in 2020 and 2021.

The regulator said: “The Commission is continuing to see repeated examples of operators failing to undertake review of their risk assessments which take into account the Commission’s emerging risk publications. We continue to see insufficient due diligence checks which increases the risk of accepting illicit funds (including the proceeds of crime and terrorist financing).

The Commission agreed regulatory settlements with four brick-and-mortar casinos – and fined another – earlier this year after discovering social responsibility and anti-money laundering failings at each venue.