Isle of Man regulator issues £3.9 million penalty to Celton Manx
The Isle of Man Gambling Supervision Commission has ordered online gambling product provider Celton Manx to pay a discretionary civil penalty of £3.9 million ($5.3 million) after ruling it breached anti-money laundering (AML) and counter terrorist financing (CTF) rules.
Celton Manx was previously licensed by the Commission but surrendered this approval in May this year. The provider held its Isle of Man licence since August 2008.
Prior to this surrender, the Commission launched an AML/CTF inspection into the operator. The regulator identified a “significant” number of contraventions of the Gambling (Anti-Money Laundering and Countering the Financing of Terrorism) Act 2018.
‘Systematic’ failings at Celton Manx
Detailing its findings, the Commission flagged a series of issues, some of these were seen as “systemic” in nature. The regulator said this showed Celton Manx, while licensed, could not show evidence of compliance with the Code.
Among the issues were a failure to ensure network partners applied measures equivalent to those in the Code. The Commission also criticised Celton Manx for not ensuring customers within its network services model had monitoring processes in place.
Also flagged was how the provider could not provide evidence of assessment of its own risk estimations of AML and CTF. The Commission also raised concerns over no enhanced due diligence on players at higher risk of AML/CTF links.
Other issues included lack of efficient record keeping, and infrequent technology risk assessments and monitoring and testing compliance in the Isle of Man. The company also failed to provide material to the Financial Intelligence Unit on a timely basis on more than one occasion.
In addition, the Commission raised concerns over the company’s money laundering reporting officer and AML/CTF compliance officer. The regulator said they were unable to demonstrate the “sufficient expertise” to properly discharge their responsibilities, thus breaching the Code.
On top of this, Celton Manx failed to meet the training and education requirements of the Code. As such, certain training provided to staff was not in line with legal requirements.
Could it have been worse for Celton Manx?
In response, Celton Manx said its own enquiries did not identify any money laundering or customer detriment. However, due to the nature of the failings, the Commission ruled that a penalty was appropriate.
Initially, the fine set by the Commission was £5.6 million. However, this was reduced by 30% to the agreed figure of £3.9 million. This was due to admittance of the failures by Celton Manx and its willingness to work with the regulator throughout.
“The Code sets out the preventative measures necessary to ensure, to the greatest degree possible, that a gambling operator’s products, systems and services are not exploited for criminal purposes,” the Commission said. “Any form of material non-compliance with the Code heightens the risk of money laundering, terrorist financing or proliferation financing occurring.
“The Commission will find unacceptable any business that is unable to satisfactorily identify, measure and mitigate risk posed by contravening the provisions of the Code.”
SK IOM also faces financial penalty
In addition to Celton Manx, the Commission issued a £70,000 financial penalty to operator SK IOM on 3 July.
SK IOM was also found to have committed several AML/CTF breaches. These included not complying with monitoring and testing compliance and concerns over record keeping.
Like Celton Manx, the operator admitted to the failures and agreed to work with the Commission to support its investigation. As a result, its fine was also reduced by 30%, having initially been set at £100,000.
“Operators must operate their compliance framework proactively and ensure that any weaknesses and vulnerabilities it may be exposed to, have been identified, analysed, understood and mitigated and not merely be reactive to such issues following inspections,” the Commission said.