In September last year the UK Gambling Commission (the Commission) consulted on the requirement for operating licence holders to assess and manage the risk of money laundering. This consultation excluded, amongst others, the holders on non-remote lottery licences.
The Commission has now launched a supplementary consultation to consider extending the requirements to assess and manage the risk of money laundering to non-remote lotteries.
Does this consultation affect you?
The consultation will be of interest to holders of non-remote operator's licences, which will include licensed operators of large society lotteries, external lottery managers and lotteries managed by local authorities.
The need for change
Whilst the Commission acknowledge that the risk of money laundering for non-remote lotteries is lower than other sectors of the gambling industry, they have identified risks to the sector which they believe need addressing.
- Acquisition or control of an operation by organised crime e.g. collusion between an ELM and its societies, or unsolicited lotteries
- Fraudulent use of identity to claim lottery prizes falsely, or anonymous customers laundering the proceeds of crime.
Whilst the Commission indicate that there is no expectation on non-remote lottery operators to routinely undertake customer due diligence, no doubt on the basis that most lotteries are low stake, low frequency and small prize gambling, they do say that they would expect licensees to have given some consideration to the risks of this occurring in their business and implement the necessary controls to manage the risks they have identified.
The Commission are seeking view on whether the following condition should be attached to non-remote licences:
- Licensees must conduct an assessment of the risks of their business being used for money laundering and terrorist financing. Such risk assessment must be appropriate and must be reviewed as necessary in the light of any changes of circumstances, including the introduction of new products or technology, new methods of payment by customers, changes in the customer demographic or any other material changes, and in any event reviewed at least annually.
- Following completion of and having regard to the risk assessment, and any review of the assessment, licensees must ensure they have appropriate policies, procedures and controls to prevent money laundering and terrorist financing.
- Licensees must ensure that such policies, procedures and controls are implemented effectively, kept under review and revised appropriately to ensure that they remain effective and take into account any applicable learning or guidelines published by the Gambling Commission from time to time.
What should you do?
If you are licensed by the UK Gambling Commission and place digital advertisements, you should consider responding to the Consultation, a copy of which can be found here
Responses to the Consultation must be with the Gambling Commission by the 20 June 2016.
Any proposed changes will be implemented in the Autumn 2016.
Given that this is a supplementary consultation on an issue that the Commission has previously sought views, it seems almost inevitable that the condition will be imposed on non-remote lottery operators licences as drafted.
Business would be well advised to start considering the steps that they can and should take to ensure that they are in a position to comply with any changes by the autumn of 2016.