With gambling company Mr Green having to pay £3M for failings relating to money laundering, Neil Williams of Rahman Ravelli details the relevant regulations imposed on the gaming industry in recent years.
Online gaming company Mr Green was fined £3M by the Gambling Commission as it failed to have effective procedures in place to prevent money laundering.
The company, which was acquired by William Hill in 2019, accepted evidence that was ten years old of a £176,000 claims pay-out as satisfactory proof of funds for a customer who deposited more than £1M. Mr Green also accepted a photograph of a laptop screen that showed currency in dollars in what was claimed to be a cryptocurrency trading account as an adequate source of cash.
In announcing the fine, the Gambling Commission said it had uncovered systemic failings in Mr Green's anti-money laundering controls. It emphasised the need to have checks and balances in place to ensure that gambling is crime free.
Mr Green, which was also penalised for its social responsibility failings towards a customer, is the ninth gambling business to be probed by the Commission since 2018. More than £20M in fines has been imposed.
The government’s “National Risk Assessment of Money Laundering and Terrorist Financing 2017’’ stated that gambling operators were allowing money launderers to use their facilities due to poor compliance with money laundering legislation.
Gambling providers have a duty, under the Proceeds of Crime Act 2002 (POCA), to report any knowledge or suspicion that a customer is using the proceeds of crime to gamble or is using the gambling facilities to launder money. Failure to do so is an offence that carries a maximum penalty of five years imprisonment and/or a fine.
Money Laundering Regulations
The Money Laundering Regulations 2017 require casinos to conduct a written assessment of their risk to money laundering. That assessment should be available for inspection, reviewed annually and updated as necessary.
The Regulations also state that a casino must:
- Carry out enhanced due diligence on any customer placing bets totalling 2,000 euros or more in a 24-hour period.
- Screen relevant employees before they are appointed and on an on-going basis.
- Appoint a member of the board of directors or senior manager as the officer responsible for compliance with the regulations.
- Establish an independent audit process to assess the effectiveness of measures introduced to comply with the regulations.
- Appoint an individual in the firm as the nominated officer.
- Inform the Gambling Commission of the identities of the person responsible for compliance with the regulations and the nominated officer within 14 days of their appointments.
Holders of remote casino operating licences must carry out enhanced customer due diligence; including checks on whether a customer is a Politically Exposed Person (PEP) or a relative or close associate of one.
The 5th Money Laundering Directive
New rules and regulations for money laundering measures came into effect on 10 January 2020, as part of the implementation of the European Union's 5th Money Laundering Directive. These regulations build upon the measures already in place and go further to introduce new rules; such as bringing cryptocurrencies into the regulatory framework.
The major change to the Money Laundering Regulations applicable to casinos is Regulation 19. This requires all operators to have appropriate anti-money laundering measures in place when launching new products or business practices and to have specific policies, procedures and controls for both money laundering and terrorist financing. Regulation 24 sets out how agents working with casinos should be given training on such issues.
Regulation 28 includes further direction regarding what information can be considered as being from a reliable source when a person’s identity is being verified. The Gambling Commission has emphasised to operators the importance of Regulation 33, which details requirements for enhanced customer due diligence measures regarding high-risk third countries, complex or unusually large transactions, unusual transaction patterns or transactions that have no apparent economic or legal purpose.