10Bet operator to pay £620,000 over AML and protection failures

Between November 2019 and June 2021, Blue Star was found to have failed to comply with several sections of the Licence Conditions and Codes of Practice (LCCP), which all licensees in the British market must abide by in line with their licences.

The regulator identified failings in Blue Star’s implementation of AML policies, procedures and controls, as well as deficiencies in its responsible gambling policies, procedures, controls and practices and weaknesses in its reporting arrangements.

Specific breaches were identified in reference to paragraphs 1, 2 and 3 of licence condition 12.1.1, which require compliance with the prevention of money laundering and terrorist financing.

Paragraph 1, or 12.1.1(1) requires licensees to conduct an effective and appropriate assessment of the risks of their business being used for money laundering and terrorist financing. However, the Commission said Blue Star’s assessment did not explicitly acknowledge certain high-risk factors or customer risks, as was therefore deemed inadequate.

For 12.1.1(2), licensees must have appropriate policies, procedures and controls to prevent money laundering and terrorist financing. The Commission said this was not the case and singled out a number of failings, including that the financial controls to automatically limit the amount customers could deposit were too high and that some players could deposit large amounts before satisfactory risk profiling could occur.

Next, 12.1.1(3) states licensees must keep their policies under review and update them as necessary. Breaches included some players being able to gamble at high velocity before automated restrictions were applied to their account and that in some cases, source of funds was not requested until a later stage of the business relationship with the operator.

The Commission also referenced a breach of paragraph 1 of licence condition 12.1.2, Anti-Money Laundering Measures for operators based in foreign jurisdictions, as a result of its failing in terms of licence condition 12.1.1.

A further breach was noted of licence condition 8.1.1, which states licensees must display certain information on every screen of their website. This includes a statement they are licensed, their account number and a link to their licensed status on the regulator’s website. The Commission notified Blue Star this link did not work but was immediately corrected. 

Customer interaction

Finally, the Commission said Blue Star failed to comply with paragraph 1b, 1c and 2 of the Social Responsibility Code Provision (SRCP) 3.4.1 on Customer Interaction. 

Paragraph 1 states that licensees must interact with players in a way which minimises their risk of gambling harm, including (a) identifying those who may be at risk of or experiencing gambling harm, (b) interacting with those customers, and (c) understanding the impact of the interaction on the customer. Paragraph 2 adds licensees must take into account the Commission’s guidance on customer interaction.

Breaking down the specific failings here, the Commission said Blue Star did not have dedicated compliance staff to monitor safer gambling alerts overnight and that players who reached safer gambling triggers overnight would be manually reviewed the following day. This process meant some customers could hit several safer gambling triggers without risk assessments and interactions occurring in real time.

Next, the Commission said Blue Star did not implement high-velocity risk alerts, which allowed some customers to spend at high velocity without interactions in real time.

The regulator also said financial risk alerts in place at the time of the assessment failed to give adequate consideration to average discretionary income data and failed to identify customers at the earliest opportunity. 

The Commission added that Blue Star could have better evidenced how customer interactions were evaluated for their effectiveness, while the operator did not act quickly enough to identify and interact with two customers reviewed by officials during the assessment, despite both exhibiting signs of potentially problematic gambling.

Ruling on the case, the Commission considered a number of aggravating factors including the serious nature of the breaches, impact on the licensing objectives and the need to encourage compliance among other operators. It also took into account the extent of steps taken to remedy breaches, Blue Star’s early recognition of failings and its cooperation.

The Commission agreed a regulatory settlement that included the £620,000 payment in lieu of a financial penalty, with this to be directed to social responsible causes, as well as a payment of £3,571.25 towards its own investigation costs. In addition, it was agreed the facts of the case would be published.