On 27 February 2020, the Gambling Commission (the “Commission”) announced that it had reached a £3 million regulatory settlement with Mr Green Limited (“Mr Green”) in relation to its failure to implement adequate social responsibility and money laundering measures.
In July 2017, the Commission conducted a compliance assessment as regards Mr Green’s online casino business, which involved the examination of three customers, and uncovered what the Commission described as prolonged systemic failings in social responsibility and anti-money laundering controls. In connection with this, Mr Green undertook a voluntary review of its top 120 customers (measured by gross gambling yield) and 113 of those customers were unable to satisfy improved anti-money laundering requirements. Consequently, in October 2019, the Commission commenced a formal review of Mr Green’s licence.
The Commission’s investigation found Mr Green to be in breach of the following provisions of the Licence Conditions and Codes of Practice (“LCCP”):
- in breach of Social Responsibility Code Provision 3.4.1(1) and Ordinary Code Provision 3.4.2, Mr Green failed to implement appropriate policies and procedures for problem gambling interactions and maintain records of any such interactions;
- in breach of Licence Condition 12.1.1, Mr Green failed to conduct anti-money laundering risk assessments or establish and implement policies, procedure and controls effectively; and
- in breach of Licence Condition 12.1.2, Mr Green failed to comply with the Money Laundering Regulations 2007 or Money Laundering Regulations 2017 (together the “AML Regulations”).
As regards the social responsibility breaches, the Commission found that Mr Green failed to engage effectively with problem gamblers and that where interactions did take place they were often not recorded or followed up. By way of example, Mr Green did not proactively review customer accounts in the round and instead focused on specific incidents; it had not considered that spending large sums of money once a month might be indicative of a player receiving their monthly wage and gambling the entirety of it away. Conflicts of interest were also possible in the structure of Mr Green’s social responsibility escalation process, which tasked the VIP team with social responsibility interactions for VIP players with no compliance oversight. As a result, a VIP manager did not interact with a player who had lost £210,000 (after a £50,000 win) on the basis that that level of play was normal. Mr Green accepted that it did not have effective social responsibility policies and procedures in place between 1 November 2014 and 7 November 2018.
Mr Green’s anti-money laundering failings included relying on historic (rather than up-to-date) source of funds information contrary to its policies and procedures and failing to carry out appropriate source of funds checks on high risk customers. By way of illustration, ten-year old evidence of a £176,000 claims pay-out was accepted as satisfactory source of funds for a player who had deposited over £1 million and separately, a business account overdrawn by £12,000 was ignored during source of funds checks in favour of a screenshot showing currency in an alleged crypto-trading account. Mr Green accepted that it had not complied with the AML Regulations between 1 November 2014 and 7 November 2018.
As a result of the Commission’s findings, the following regulatory settlement has been agreed:
- £3 million payment in lieu of a financial penalty to be directed towards the National Strategy to Reduce Gambling Harms;
- review of the next 130 top customers following the initial review of the top 120 customers; and
- £10,349.77 contribution towards the costs of the Commission’s investigation.
In reaching the regulatory settlement, the Commission had regard to the following aggravating factors:
- Mr Green’s breaches were persistent and regular across a 4-year period;
- the systemic nature of the breaches meant that customers not known to the Commission were likely adversely affected;
- the desire to encourage proper compliance; and
- the breaches arose in circumstances similar to previous cases which were the subject of lessons learnt guidance.
The Commission also considered the following mitigating factors:
- following its acquisition by William Hill, Mr Green implemented more thorough policies and procedures; and
- Mr Green accepted full responsibility early in the investigations and acted co-operatively throughout.
This regulatory settlement is a further example of the Commission’s robust approach to what it considers to be inadequate anti-money laundering processes in the gambling sector, as well as its determination to ensure there are adequate safeguards in place to protect vulnerable customers. Richard Watson, Executive Director at the Commission, emphasised that “[c]onsumers in Britain have the right to know that there are checks and balances in place which will help keep them safe and ensure gambling is crime-free – and we will continue to crack down on operators who fail in this area”. Since the initiation of the Commission’s regulator probe in 2018, it has imposed penalty packages accumulating to more than £20m and Mr Green is the ninth gambling business to be sanctioned.
The level of financial penalty appears to reflect the seriousness and prolonged nature of Mr Green’s breaches of the LCCP. It should also be recognised that the Commission does not appear willing to ignore historic breaches, even where there has been a change in control of the operator and policies and procedures have been significantly improved.
The Commission’s public statement detailing the regulatory settlement is accessible here.
Co-authored by Lewis Smith.