UKGC Publishes Compliance and Enforcement Reports


The UKGC published its annual compliance and enforcement reports well ahead of the start of 2022. The report covers the regulator’s findings after extensive casework against license holders and also highlights areas in the gambling industry where raise standards are needed most. Covering the 2020 – 2021 financial year, it includes the casework by the UKGC that led to the license suspension of five operators and the revocation of one operator and nine PML holders. The total of £32.1 million paid during the financial year as a result of settlements or fines by 15 gambling businesses reaches its highest.

Andrew Rhodes, the Chief Executive of the Gambling Commission shared how impressed he is by the commission’s enforcement work carried out during the 2020/21 period. He also shares his disappointment with operators failing to adhere to two of the most important rules, social responsibility and anti-money laundering. The rules are in place with good reason, the first is to protect players and the second is to ensure a crime-free gambling environment, and there are far too many breaches.

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The reasons for not following or ignoring the rules are as much a concern as the failure to comply itself. Casework indicates that operators failing to adhere fail to make the necessary resources available or places commercial objectives above that of the regulatory ones. Chief Executive Rhodes find it unacceptable and so will others in the industry who obey the rules and do everything needed to achieve compliance.

The fact that many gambling firms faced difficult challenges during the past 18 months and that for many the future was unclear is taken into consideration. So is the fact that hard decision making included how to save jobs as well as livelihoods. While the COVID-19 threat is still very real, most of the gambling sector have largely resumed operations. The fact remains that Great Britain’s gambling regulator still sees way too many regulation breaches and everyone is in agreement that it should not be the case. The industry has the knowledge, skills and resources needed to change it.

The Commissions’ annual compliance and enforcement report is fundamental reading for everyone involved with or in the British gambling industry. Anyone showing sufficient interest in reading the TheSlotBuzz post should read the entire report by the commission. Unlike previous years the 2020/21 report is less methodical structured than that of previous years. In part, it is due to the current Compliance and enforcement report not covering social responsibility and customer interaction failing.

While this is surprising due to a number of failings identified during the past year, the report states that the Commission will publish its response to the remote interaction with customers – consultation – call for evidence and the update of LCCP relevant requirements. At the same time, it will include consolidating and updating all the formal guidance by the Commission on customer interaction for remote operators. There is also triggers and customer/player affordability, a very controversial matter that will enjoy the attention of the Commission when it responds to the above-mentioned matters.

Regardless of the reasons for the exclusion, the current report also excludes Betting Exchanges and White Label Partnerships sections. None of these has enjoyed the same level of interest across the past twelve months as they had the year before. Instead, the current report focuses on six sections including the compliance and enforcement report, counter-terrorist financing and anti-money laundering. Licensed operators combined with financial stability is a new section, and so is licence suspensions and special measures. The report also includes reviews renewal of personal licenses and illegal gambling.

Compliance and Enforcement Report

The 2020/21 year was one of the most active for both the compliance and enforcement teams since the Gambling Commission slows no sign of slowing down in taking strong action against online operators failing to adhere to the requisite standards. The enforcement and compliance teams continued to work, even though global disruption was caused via Covide-19. The regulator’s extensive casework against licensees not adhering to the rules led to the cancellation of one operator’s licence and the suspension of another five operator licenses.

Fines & Regulatory Settlements Reach Highest Ever

The total paid in settlements or fines reached a total of £32.1 million, paid by 15 gambling establishments. As part of the UK Gambling Commission’s process and refined focus, 25 full assessments were conducted on 25 online operators and the number of targeted land-based assessments reached five. In addition, the commission did 83 reviews on websites and the number of security audits reached 262. The number of personal license reviews commenced was 29 while 57 got finalized.

It also came to light that the same two weaknesses showed up in terms of cases regarding operators failing to comply with anti-money laundering and social responsibility rules. These rules are in place to protect and free gambling from crime, while the rules underpin at least two of the all-important three licensing objectives. Without these, it would not be possible to permit gambling according to the rules and regulations laid out in the Gambling act 2005. Making it clear that adherence should be the most important thing on every operator’s mind.

LCCP Requirements

The UKGC continues to focus on the protection and well being of customers and includes checking that all operators meet the LCCP requirements in terms of looking after their players/members. According to findings by the Commission, the number of instances in which operators fail to consider the link between problem gambling and TF as well as ML is increasing despite Guidance for non-remote and remote casinos: The prevention of money laundering risks, and ways to combat terrorism financing. Plus the responsibility and duties under Act 2002 regarding the Proceeds of Crime: Advice to operators that states that a pattern of inconsistent spending or an increase in spending that is inconsistent with the recognizable source of income, could indicate problem gambling, money laundering or a combination of both.

Raise Standards: Compliance and enforcement report

Common poor practices include failure to understand and consider circumstances in which the (EDD) enhanced due diligence should be applied. A new tab is opened whenever a high risk of TF/ML is detected in accordance with the Terrorist Financing, Anti Money Laundering Rules and Transfer of Funds – Regulations 2017 (information on Payer).

Any customer identified as a higher risk needs to be subjected to in-depth and frequent scrutiny much greater than that of lower-risk consumers or players. The Commission found that one online casino operator failed to have any controls in place to keep an eye on third-party activities. Even though the anti-laundering casino guidance by the Commission states that operators need to give due consideration to risks posed by third parties they deal with during business-to-business relationships.

Social Responsibility LCCP Code Provision 1.1.2 states that the licensee is responsible for the third party action with whom they have contracts in the provision of all aspects related to licensed activities.

Delayed Customer Identification Checks: The UK Gambling Commission found evidence that identity checks are only carried out by remote operators after players were permitted to gamble. It is in breach of licensing condition 17.1.1 clearly stating that before a player is allowed to gamble, the licensee needs to obtain information and verify the identity of the player, before allowing the member to gamble.

Commercial considerations superseding CTF and AML compliance: The UK Gambling Commission came across TF and ML risk assessments of operators that place greater importance on areas such as reputational damage and adverse media coverage. Some operators state that failure to adhere to the requirements of CTF/AML and or social responsibility might result in negative press, while the primary concern of the operator should be focused on illuminating the risks of TF and ML.

No Clear Methodology in place: The failure of not having adequate risk assessments in place leaves operators unable to fully understand the extent of TF and ML risks, which leads to weak controls, procedures and policies. This includes vague statements such as “KYC checks” or “customer monitoring” in risk assessments not including stating what the measurements actually involves. While Regulation 27(5) states that a transaction can be collecting of winnings, depositing of funds or depositing of funds, it was found that a remote operator only used EDD measures after a player incurred yearly losses of £12k. The ML guidance by the commission states that all activities and transactions need to be monitored in order to detect suspicious activities.

Personal Management License Holders

Great Britain’s regulator expects operators to act with diligence, skill and care while conducting their business with integrity. Operators need to take care of controlling and organizing their affairs effectively and responsibly in which adequate systems minimize risks, and help to comply with their license regulations.

In raising standards, the commission reminds that it is people who make decisions and not businesses, which is why license holders are held responsible for the failure of regulations. The past year outcomes resulted in 10 license revocations, which included two (PML) Personal management licenses and eight (PFL) personal management licenses. Results also include 11 warnings issued to senior management and a warning with conditions placed on a PML license holder. While 10 surrendered, 21 advice to conduct was issued to PMLs.

The extensive casework by Great Britain’s regulator identified key issues in regards to checking the source of wealth that is used by players to gamble. The lack in record keeping of audit trails and adequate documentation seen in repeated instances, explain the poor decision making by PMLs in CTF and AML. Delays or complete failures continue in reporting criminal offences as required by the 2005 Gambling act regarding schedule 7 offences.

Poor practices by reporting officers include the failure to report any suspicious activity to (UKFIU) The UK financial intelligence unit when suspicions surface of terrorist financing or criminal spending. The lack of oversight by senior management further leads to failure in reporting or the delay of corresponding any SAR activity to the commission.

Gambling Industry

Great Britain’s regulator’s extensive casework in 2020/21 highlights the lack of obeying rules by license holders that are necessary to protect players and keep gambling crime-free. Issues uncovered by the report included the activities of a criminal gang targeting no less than 28 online operators via the use of numerous identities to deposit significant amounts. Including a deposit worth £574,675.01 accepted by an online betting operator. In another instance, nearly £15m was stolen by a financial adviser from clients and used at deposited at multiple operators to fund his gambling addiction.

The UKGC aims to protect the vulnerable and while it issues licenses to gambling businesses, the services of the commission include advising the government on issues relating to gambling. During the previous financial year, the gambling commission’s work included suspension of five licenses, reviewing 49 license holders, revoking 11 licenses, and issuing 12 penalties totalling more than £30 million. Including 33 website reviews, 234 security audits, 350 compliance assessments of online and land-based operators, 3,000 intelligence reports and handling 630 reports of sports rule breaches, suspicious gambling activity and the misuse of inside information.

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