Recent developments and enforcement actions in the gambling sector have shown the need for operators to make a sound assessment of their money laundering risks and to ensure that their money laundering policies and procedures are effectively implemented.
This article examines the recent updates in the anti-money laundering landscape of the gambling sector and anticipates what changes are on the horizon.
In November 2020, the Gambling Commission released a compliance and enforcement report expressing concerns that some licensees’ money laundering and terrorism risk assessments, policies, procedures and controls were inadequate.
The publication of this report was preceded by a series of enforcement actions by the Gambling Commission against companies for money laundering errors:
- In October, three online gambling providers were examined by the Gambling Commission. As a result, two of the gaming providers have new terms and conditions imposed on their licenses. All three operators needed to improve their anti-money laundering policies and procedures, and the actions of the Personal Management License (“PML”) holders in each remain to be reviewed. Instead of a fine, each licensee also made a payment to the National Gambling Damage Reduction Strategy.
- In the past few months, White Hat Gambling and Aspers Stratford City Casino have also been investigated and decisions made against them for money laundering errors have been published.
The measures taken by the Gambling Commission should come as no surprise. For several years now, it has expressed its intention to put in place strict and proactive compliance and enforcement measures to raise standards in the gambling sector.
HM Treasury’s national money laundering and terrorist financing risk assessment published in December 2020 found that the gambling sector has a low risk of money laundering. However, casinos, off-course betting and all online gambling companies have been rated as higher risk compared to others within the sector. In addition, it was found that the severe weakening by the Gambling Commission was sufficient to keep the overall risk score as low as possible compared to the generally regulated financial sectors. It is clear, therefore, that operators should not be comforted by the low risk rating as it does their anti-money laundering obligations under the Proceeds of Crime Act 2002 and the Gambling Act 2005 (and, if it is a casino, the Money laundering) does not affect regulations either). An operator must identify its money laundering risks and mitigate them by implementing solid guidelines and procedures that should be reviewed regularly and revised if necessary.
The Gambling Commission has announced its intention to take enforcement action not only against companies but also against people with PML. This can be clearly seen in the case of Caesars Entertainment UK Limited, which was fined € 13 million in April 2020 for breaches of its social responsibility, money laundering and failures in customer interaction. As a result of this investigation, three executives gave up their PMLs. Between June and December 2020, the Gaming Commission announced rulings against another seven PML holders for failing to ensure that effective anti-money laundering policies, procedures and controls were in place.
Looking ahead, there may be changes in the regulatory system. The government has announced a review of the Gambling Act 2005, and has also published a service specification and call for evidence that will expire on March 31, 2021. One point to consider is the powers and resources of the Gambling Commission. It will be interesting to see whether these are considered sufficient or whether the Gambling Commission is given further powers to investigate violations. At the end of January it was also announced that the Ministry of Digital, Culture, Media and Sport had launched a consultation on the funding of the Gambling Commission. An increase in fees has been proposed to allow the Gambling Commission to respond to new regulatory challenges. The Gambling Commission has found that the increasingly global nature of the UK gambling market means that major risks such as money laundering are global in nature and therefore require global solutions. Although the results of these consultations are not yet known, it is clear that the Gambling Commission intends to maintain an active role in the fight against money laundering.