VGC, which trades as Global Gaming Ventures and holds non-remote casino and ancillary remote casino operating licences, agreed to pay the fee as part of a regulatory settlement agreed with the Commission.
An investigation by the Commission focused on the handling of 10 customers between January 2017 and July 2019, following concerns identified at a compliance assessment in July 2019.
The Commission said it uncovered a series of failings in the way VGC identified and managed customers who were at higher risk of money laundering and gambling-related harm. These failings, the regulator said, stemmed from VGC failing to effectively implement anti-money laundering and safer gambling policies and procedures.
A review that launched on 24 October 2019 revealed VGC had breached conditions of its operating licence, and as such the Commission would take action.
Breaches identified included failing to identify customers at risk of gambling-related harm, which the Commission said was in relation to Social Responsibility Code Provision (SRCP) 3.4.1.
At the time it was in place, SRCP 3.4.1 stated that licensees must put into effect policies and procedures for customer interaction where they have concerns a player’s behaviour may indicate problem gambling.
The Commission identified weaknesses in VGC’s safer gambling controls whereby it had failed to effectively implement its policies and procedures for customer interaction and did not make use of all relevant information to ensure effective decision making and to guide effective customer interactions.
Examples of failings here included how Customer A incurred losses of £275,000 over 22 months before VGC requested source of funds evidence. When source of funds information was finally sought, VGC relied on a tax account that supported income of £217,391, which the regulator said clearly did not support the affordability of the losses.
To establish source of wealth, the Commission said VGC also relied on the customer being the main shareholder for a dormant company and the fact that the firm had undertaken construction work at its premises. Furthermore, although regular interactions took place with the customer, VGC accepted it failed to record these interactions and its rational for decisions on the customer’s profile as required by its own policy.
Customer B also incurred total losses of £93,294 over 16 months on their account since registering in February 2017. Numerous ‘no concern’ interactions were recorded on the customer’s profile, but no rationale was recorded as to why the interaction was undertaken.
This, the Commission said, was despite VGC’s own customer interaction policy stating “any interaction must be recorded on a Customer Interaction record and retained… Where subsequent customer interactions take place with the same individual, these must also be fully recorded”.
Further failings were identified in relation to licence condition 12.1.1 for the ‘Prevention of Money Laundering and Terrorist Financing’. This condition requires licensees to ensure such policies, procedures and controls are implemented effectively, kept under review, revised to ensure they remain effective, and take into account learning or guidelines published by the Commission.
VGC accepted weaknesses and shortcomings in the relation to the implementation of some of its procedures and controls.
During the investigation, the regulator identified VGC failed to undertake sufficient checks to verify the underlying source of the customer funds in some instances.
The Commission again referred to Customer A as an example, setting out how they incurred losses of £275,000 over 22 months before a request of funds evidence was made, and after which this showed the losses were not sustainable and the fact VGC relied on the customer being the main shareholder for a dormant company that worked at its premises
Customer B, who lost £93,294 was also cited again, with the Commission acknowledging while VGC requested they provide proof of source of funds in March 2018 within seven days, the customer did not submit copies of bank statements until seven weeks later but was allowed to gamble at VGC’s premises in that period. Statements showed a substantial balance and regular payments into the account, but the origin of the funds were not verified.
In addition, the customer experienced a number of wins and was believed to have used these funds to gamble. However, it was not clear whether the customer had withdrawn these funds and removed them from VGC’s premises.
The Commission found the customer was spoken to eight months later with regards to an annual review and they advised VGC they would submit the required documents. However, the customer visited the premises a week later but did not provide the documentation and it was not clear if, or when, the documents were submitted.
The regulator said VGC cooperated with enquiries during the investigation and accepted the implementation of its policies and procedures in respect of AML and safer gambling were not effective.
VGC also committed to an ongoing programme of improvements, including a full review of its process for collation, review and sign-off of customer profiles, a review of its Enhanced Due Diligence process, and a detailed gap analysis to assess the areas of its policies that required improvement.
The operator also refined its recycled winnings process to ensure its acceptance of recycled funds as source of funds or source of wealth is documented and justified, and updated and implemented a new social responsibility policy with improved capability to identify potential indicators of risk.
Other efforts included establishing a relationship with NHS Northern Gambling Clinic to help improve the awareness and skill set of staff to interact with customers exhibiting problem gambling indicators, while it introduced new reports to identify customers spending more than they can afford, exhibiting changes in their level of play or frequency of visits.
In addition, VGC improved its record keeping practices to include a stronger focus on the quality of narrative recording of customer interactions and the recording of overall rationale for decisions made.
The £450,000 settlement comprised £241,000 to represent divestment of the amount of financial gain accrued as a result of the accepted failings, and £209,000 in lieu of a financial penalty. VGC also agreed to pay Commission costs of £21,578.17.
“These failings were identified as part of our ongoing drive to raise standards across the whole gambling industry,” Commission executive director Helen Venn said. “All operators should be very aware that we will not hesitate to take action against those who fail to follow rules that are in place to make gambling safer and prevent it being a source of crime.
“Consumer protection should be an operator’s main priority and we would advise every gambling business to read the public statement so they do not make the same mistakes as VGC.”