United Kingdom Gambling Commission

UKGC Issues Another Round of Online Gambling Operator Penalties

The United Kingdom Gambling Commission (UKGC) has announced another round of financial penalties levied against licensed operators who have fallen short of the Commission’s tightened rules regarding consumer protection and anti-money laundering practices. On Thursday, the UKGC announced a total of £13.95 million (over US $17.8 million) against three companies for their ongoing business sins.

Leading the list, in the only one of the three that was previously announced, the UKGC ordered Daub Alderney to pay a financial penalty of £7.1m. Adding to that, Casumo has been ordered to pay a financial penalty of £5.85m, and Videoslots will pay £1m “in lieu of a financial penalty”, which, well, amounts to the same thing.

Daub Alderney (Stride Gaming), which operates several online casino and bingo sites serving the UK and other jurisdictions, was notified by the UKGC in January that it was being investigated. The detailed findings of that investigation determined that the company’s internal operations were deficient in several areas that impacted its responsibilities toward its customers. Among those findings, which resulted in a £7.1m fine:

  • The Social Responsibility policy and procedure was not sufficient – it only gave examples to staff of potential issues as opposed to outlining detailed action to be taken to mitigate risk, and there were no specific policies for VIP customers;
  • There had been insufficient resources for identifying and mitigating SR risk;
  • While examples were seen of action taken in respect of complaints relating to problem gambling, adequate systems and controls to proactively identify potential problem gambling were not in place. Officials saw no evidence to show that daily reports from the Licensee’s systems were used appropriately to identify patterns of play which may point to customers potentially having gambling problems which would require a proactive customer interaction. Officials noted that issues which related to the identification of AML risk, such as payment details not matching the customer and duplicate accounts, were not used to identify customers with potential gambling problems such as previously self-excluded individuals attempting to gamble using a relative’s payment card;
  • Customer bases were not joined up and the whole of the Licensee’s customer base could only be searched using a manual process involving an ad hoc report;
  • Officials saw evidence of customers being offered free spins or Amazon vouchers to retain their business, but it was not clear that this was appropriate.

Daub Alderney has since enacted strengthened measures, including hiring more staff, to rectify the issues.

Then there’s Casumo, which was also notified by the UKGC in January of a pending investigation. Another online-casino site, Casumo was found by the Commission to be markedly deficient in its internal anti-money laundering protections and systems. Among the largest issues, Casumo failed to create a compliance department and also failed to train its employees regarding business-standard AML practices.

Casumo had some consumer-protection problems as well; when combined with the AML issues, it was about £5.85 million:

  • A review of three accounts showed that the customers all demonstrated potential signs of problem gambling based on their gambling pattern and spend, however this behaviour did not trigger any customer interaction with the customers;
  • The Licensee confirmed that the accounts did not raise any concerns;
  • The Licensee’s policies did not flag customers as an SR concern as a result of the size of their losses.

Videoslots Ltd. got off relatively cheap, if a million-pound payment and self-acknowledgement of the problems is “cheap” for a second- or third-tier operator. Videoslots was dinged for a deposit system which didn’t conduct any serious KYC (Know Your Customer) checks until after any given customer’s deposits had topped £2,000, which, might catch high-rolling problem gamblers but was no protection whatsoever for people of limited means who exhibited the same behavior.

Then, when it came to the high rollers, Videoslots didn’t do the consumer-protection stuff properly anyway. From the UKGC report:

  • Customer A commenced gambling with Videoslots in November 2014. The customer subsequently deposited more than £211,000 and lost approximately £45,000 during game play. The initial checks carried out with the customer by Videoslots had revealed that the customer’s bank account was overdrawn. As of November 2017, Videoslots’ knowledge of the customer was reliant on identity documents and third-party assurances, where they should have undertaken enhanced customer due diligence measures (including establishing the source of the customer’s funds);
  • Customer B failed automated identity checks, resulting in the customer providing Videoslots with a fraudulent driving licence as evidence of their identity. In the initial stages this was not detected by Videoslots. The customer was then able to register multiple fraudulent bank cards, which was initially not detected. The bank cards were used to deposit and play large amounts of funds (for example £6,000 in one day in September 2017) without intervention by the operator. Videoslots’ systems did, in due course, alert them to the activity, by which time the customer had made £17,405 in deposits, suspected to be the proceeds of crime.

These situations are almost always found out, eventually, but when the operator drops the due-diligence ball, that finding out comes way too late.

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