AML failure: Gambling Commission takes action
The Gambling Commission has announced that William Hill Group (International) Limited (“William Hill”) will pay a minimum of £6.2 million as part of an overall penalty package imposed for breaches of the anti-money laundering (AML) and responsible gambling regulations. This is the largest penalty imposed by the Gambling Commission to date for AML failures.
The Gambling Commission found that as a result of William Hill’s failure to follow proper processes ten customers were, between November 2014 and June 2017, allowed to deposit a total of £3.4m without providing adequate information about the source of their funds. William Hill returned a gross gambling yield of £1.2m in respect of these transactions. It later transpired that these ten individuals were, or may have been, gambling with the proceeds of crime, including thefts from their employers and fraud offences involving elderly victims.
The Gambling Commission has not ruled out the possibility that “further incidents of failures” may emerge and in such cases William Hill will be required to divest any money it has derived from those transactions.
The Commission placed particular emphasis on senior management failures, noting that senior management at William Hill failed to mitigate the “significant operational risk that due diligence systems were failing and that its anti-money laundering and social responsibility teams were not sufficiently resourced”.
The Commission’s focus on senior management dovetails with the greater onus on senior management accountability introduced by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) which came into force in June 2017 (post-dating the period under investigation in the William Hill case). “Senior management” includes employees who have sufficient knowledge of the casino operator’s money laundering risk exposure and who are of sufficient authority to take decisions affecting that risk exposure. MLR 2017 introduces employee screening requirements and casino operators must also, depending on their size, appoint a board member or member of senior management with overall responsibility for the operator’s compliance.
The Gambling Commission expects senior managers to be “fully engaged” in the processes for the casino operator’s assessment of the risks of money laundering. They must be involved at every level of the decision-making process to develop the operator’s policies and procedures to comply with the MLR 2017. This includes requiring the Nominated Officer to provide an annual report covering the operation and effectiveness of systems and controls to combat money laundering and taking any action necessary to remedy any deficiencies identified in a timely manner.
Recent action by the Gambling Commission suggests that it is increasingly turning its attention to the role of senior individuals in combatting money laundering within the industry. This is in keeping with other sectors where regulators, such as the FCA, have increasingly sought to hold individuals to account for their part in failing to maintain adequate systems and controls.
Senior managers should remind themselves of their specific responsibilities and operators should take extra care that the policies and procedures are up-to-date and that staff are adequately resourced, both in terms of funding and training, to apply them on the front line.
If you have any questions about the issues raised in this blog, please contact a member of our criminal litigation team.
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