Online casino fined £3 million for "systemic" AML failings
This has led to a significant penalty of £5.9 million being levied against the owner. It also has to carry out a review of its top 50 customers between 2015 – 2017 to identify any further failings and thereafter divest itself of any profit from those failings. The matter has not concluded yet though – the Commission is still investigating the role of the Personal Management Licence holders (PMLs) to establish their roles in the failings.
The investigation was launched by the Gambling Commission (“ the Commission”) following a number of complaints. It concluded that between November 2014 and October 2017 Ladbrokes and Coral: “failed to put in place effective safeguards to prevent consumers suffering gambling harm and against money laundering”. This situation continued after their merger as the Ladbrokes Coral Group. The Commission cites: “These were systemic failings at a large operator which resulted in consumers being harmed and stolen money flowing though the business and this is unacceptable.” It was found to have inadequate AML policies and processes and insufficient staff to support the systems resulting in ineffective controls. The failings were compounded because when it did identify the problem, the changes implemented were not adequate.
The Commission considered the duration of the offending as aggravating; in addition to the fact that during this time the Commission had published a significant amount of guidance to ensure best practice and compliance with rules, regulations and the law. The message is – there is no excuse for non-compliance.
The Ladbrokes Coral ruling itself also gave a clear message to all gambling operators – “take account of the failings identified in this investigation to ensure industry learning. Operators should consider the following questions:
It is expected that this direct enforcement action is going to be ramped up as tackling money laundering remains a key law enforcement and government priority, as seen in the recently published National Economic Crime Plan 2019-22 and HM Treasury’s Anti-money laundering and counter-terrorist financing: supervision report 2017-18.
The latter report confirms that in the period 2017-18 the Commission made 231 referrals to law enforcement for money laundering / terrorist financing (ML/TF) related matters, an increase from 197 in the previous reporting year. It has also received recognition to date (in the UK mutual evaluation report undertaken by the Financial Action Task Force) for its good understanding of the ML/TF risks in the gambling sector and applied risk-based approach to supervision. It will be expected to continue these high standards of AML/TF supervision.
It is also of note that the Commission is still investigating the Personal Licence Holders in respect to the Ladbrokes matter. This is a very clear indication that it is set on holding individuals within the sector to account (and follows the investigation and enforcement action relating to William Hill in February 2018 when senior managers were at the heart).
It is imperative therefore that operators review their policies and procedures and working practices to ensure compliance with their obligations under the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2017.
For further information on the issues raised in this blog post, please contact a member of our criminal team.
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