The Gambling Commission’s Enforcement Actions published in May 2022

In May 2022, the UK Gambling Commission carried out enforcement action against two operators who have been fined a combined total of £675,000 and suspended the licence of a third operator pending a regulatory review. The Commission’s concerns about all three operators revolved around social responsibility and anti-money laundering failings.

Goldchip Limited

On 17th May 2022, the Commission published a statement to say that it has suspended the operating licence of Goldchip Limited and will be carrying out a section 116 regulatory review of the operator. The announcement of the review follows concerns on the part of the Commission that Goldchip may be demonstrating social responsibility and anti-money laundering failings.

Jumpman Gaming Limited

On 3rd September 2020, the Commission commenced a section 116 regulatory review into Jumpman Gaming Limited resulting in a regulatory settlement published on 17 May 2022. The Commission’s review found failings in Jumpman’s processes aimed at preventing money laundering and promoting safer gambling by protecting vulnerable people.

Jumpman’s key failings consisted of the following failures and breaches:

• AML: Breach of paragraph 1 of licence condition 12.1.1 – Paragraph 1 requires licensees to conduct an assessment of their risks of their business being used for money laundering and terrorist financing. Licensees must ensure that the risk assessment is reviewed in the event of any changes of circumstances (for example, the introduction of new products or technology). Paragraph 1 requires licensees to conduct an assessment of their risks of their business being used for money laundering and terrorist financing. Licensees must ensure that the risk assessment is reviewed in the event of any changes of circumstances (for example, the introduction of new products or technology). Jumpman’s risk assessment failed to:
  • take into account information on the risks of money laundering and terrorist financing made available by the Commission;
  • sufficiently assess the risks posed by certain customers; and
  • fully assess the risk posed by business relationships or transactions involving countries identified as high risk for money laundering and terrorist financing.
• AML: Breach of paragraph 2 of licence condition 12.1.1 – Paragraph 2 states that following the risk assessment, licensees must have appropriate policies, procedures and controls to prevent money laundering and terrorist financing. Jumpman accepted that there were deficiencies in their policies and procedures to prevent money laundering and terrorist financing. Such failures included the fact that the policies, procedures and controls conflated source of wealth and source of funds. Furthermore, they did not provide sufficient guidance to employees on conducting customer due diligence, enhanced customer due diligence, ongoing monitoring and enhanced ongoing monitoring.
• AML: Breach of paragraph 3 of licence condition 12.1.1 – Paragraph 3 states that licensees must ensure that its policies, procedures and controls are implemented effectively, kept under review and take into account guidelines published by the Commission. The Commission found that customers were able to deposit and lose well in excess of the average UK income before meaningful reviews were conducted. Jumpman was not in compliance with its own policies and procedures in relation to customers that hit AML alert triggers.
• AML: Breach of paragraph 1 of licence condition 12.1.2 – This licence condition requires remote casino licensees to comply with Parts 2 and 3 of the Money Laundering Regulations 2007 (UK Statutory Instrument No. 2157 of 2007) as amended by the Money Laundering (Amendment) Regulations 2007 (UK Statutory Instrument No. 3299 of 2007). Jumpman had not assessed the risk of money laundering and terrorist financing and had therefore failed to establish and maintain effective policies, procedures and controls. For example, a customer had gambled and lost over £5,000 before Jumpman requested customer due diligence documents and a customer who hit a deposit trigger did not have their account suspended until the customer had lost £23,500.
• Customer interaction: Failure to comply with paragraphs 1 and 2 of Social Responsibility Code Provision (“SRCP”) 3.4.1 – Paragraph 1 of this provision states that licensees must interact with customers in a way which minimises the risk of customers experiencing the harms associated with gambling. Such measures include identifying and interacting with customers who may be at risk of experiencing harm and understanding the impact of the interaction on the customer. Paragraph 2 states that licensees must take into account the Commission’s guidance on customer interaction. The Commission found that Jumpman was over-reliant on automated interactions with customers who hit safer gambling alerts and failed to understand the impact and effectiveness of these interactions. Furthermore, Jumpman did not conduct affordability assessments for individuals who met certain thresholds and triggers. For example, a customer lost nearly £19,000 in approximately 4 months without sufficient evidence being gathered to assess affordability.
• Multiple accounts: Failure to comply with SRCP 3.9.1 – This provision states that where customers hold more than one account, licensees must have in place procedures which enable them to relate each of the accounts together and ensure that such accounts are monitored. Jumpman had failed to prevent customers from opening multiple accounts in order to avoid thresholds and triggers.

The regulatory settlement reached between Jumpman and the Commission consists of:

• £500,000 payment in lieu of a financial penalty;
• Agreement to a publication of a statement of facts in relation to this case; and
• Payment of in excess of £13,000 towards the Commissions costs of investigating the case.

Aggravating factors included the fact that there was a clear impact on the first and third licensing objectives and that breaches were systemic. In addition, the Commission found that Jumpman ought to have known of the breaches and that similar breaches had occurred in previous cases published by the Commission. Mitigating factors included the significant and prompt steps taken by Jumpman to rectify the breaches and improve their policies and procedures.

Progress Play Limited

On 14th August 2020, the Commission commenced its section 116 regulatory review into Progress Play Limited resulting in a regulatory settlement published by the Commission on 17 May 2022. The Commission’s review found failings in Progress’ processes aimed at preventing money laundering and protecting vulnerable people.

Progress’ key failings consisted of the following failures and breaches:

• AML: Breach of paragraph 2 of licence condition 12.1.1 – Customers were given 14 days to provide source of funds information, but during this time were allowed to continue to gamble.
• AML: Breach of paragraph 3 of licence condition 12.1.1 – Progress failed to apply its source of funds policy where customers hit triggers and failed to review source of funds information effectively and therefore take effective decisions. This resulted in customers being able to spend more than their earnings. Furthermore, there was a lack of ongoing customer due diligence and enhanced customer due diligence.
• AML: Breach of paragraph 1 of licence condition 12.1.2 – Progress did not establish and maintain effective policies, procedures and controls to combat the risk of money laundering and terrorist financing. Progress also did not establish appropriate risk-sensitive policies and procedures. As a result, Progress did not implement effective due diligence measures or appropriately monitor and obtain customer source of funds information to ensure that transactions were consistent with their knowledge of the customer.
• Customer interaction: Failure to comply with paragraph 1 and 2 of SRCP 3.4.1 – Progress did not undertake any reviews of its interactions with customers and therefore failed to implement its own policies, procedures and controls. Progress did not conduct affordability assessments for individuals which hit certain triggers. Furthermore, VIP agents may have received pay incentives linked to the take up of bonus offers and promotions.
• Records: Failure to consider ordinary code provision 3.4.2 – This provision requires operators should keep a record of customer interactions and, where interactions have been ruled out, the reasons for this. Progress failed to keep a record of customer interactions.

The regulatory settlement reached between Progress and the Commission consists of:

• a payment of some £175,000 in lieu of a financial penalty;
• agreement to the publication of a statement of the facts in relation to this case; and
• a payment in excess of £12,000 towards the Commission’s costs of investigating the case.

Aggravating factors included the fact that Progress should have been aware of the breaches and that the breaches had a serious impact on the licensing objectives. The breaches were also similar to those found in previous cases published by the Commission. Mitigating factors included the fact that Progress cooperated with the Commission and implemented remedial steps in their policies and procedures.

Comment

An aggravating factor in both the Jumpman case and the Progress case was the fact that breaches were similar to previous cases investigated by the Commission. Leanne Oxley, the Commission’s Director of Enforcement and Intelligence, stated that other operators ought to learn from the mistakes that were made and evaluate what improvements they can make in their own businesses. These cases demonstrate the Commission’s desire to see operators carefully consider the failings identified in enforcement cases and to keep up to date via the News page on the Commission’s website and the Commission’s e-bulletins.