TGP fined for AML and social responsibility failures

The UK Gambling Commission (“Commission”) has concluded enforcement action against TGP Europe Limited (“TGP”) in respect of anti-money laundering (“AML”) and social responsibility breaches from April 2020 and August 2022, as well as failings in its oversight of its white label partners.

Decision

On 05 April 2023, the Commission fined TGP £316,250 as part of a regulatory settlement following a review into its licence. TGP, which operates 19 websites and sportsbook brands, including betvision.com, 12bet.uk and Fun88, was also issued an official warning and had additional conditions attached to its operating licence.

TGP is the licence holder used by many of the Asian-facing brands which sponsor British football teams. They enter into a “white label” arrangement with TGP under which TGP is licensed to offer betting under the third party’s brand. A white label business in the online gambling space typically sees a licensed gambling operator partnering with a third party brand owner, who licenses its brand to the operator for use on its gambling websites. From the brand owner’s perspective, it doesn’t need to undergo the regulatory scrutiny which would be required to hold its own licence. However, that burden of regulatory due diligence then falls on TGP. White label deals were first looked at by the Commission in 2020 in their enforcement action against FSB (see our note here) and the Commission’s investigation into TGP applies some of its conclusions from the FSB case.

1. Social responsibility – (Breach of Social Responsibility Code of Practice 3.4.1, issued under section 24 of the Gambling Act 2005)

The Commission concluded that TGP failed to meet its social responsibility obligations, allowing customers to continue to gamble after hitting multiple safer gambling alerts without intervention. For the interactions that did take place, TGP was found to rely on automated, rather than human, interactions and had not assessed the effectiveness of these or whether additional steps were required, such as intervention by telephone.

2. AML – (Breach of paragraphs 1, 2 and 3 of Licence Condition 12.1.1, Licence Condition 12.1.2 and Ordinary code provision (OCP) 2.1.1)

The Commission cited various AML failings, including failing to conduct adequate risk assessments in respect of money laundering and terrorist financing or implement effective policies and procedures to undertake suitable due diligence prior to the entry of white-label agreements. In the FSB decision, the Commission had made clear that it expected licensees to obtain assurances that third party partners are competent and reliable by conducting adequate due diligence. In respect of TGP, the Commission identified risks posed by customers providing false or stolen identification documentation and the existence of unusual and complex transactions, which were not appropriately addressed. Additionally, TGP was found to have not adequately considered and mitigated money laundering risks posed by its business-to-business relationships.

Comment

The Commission took the opportunity to reinforce the importance of operators meeting their obligations in respect of white-label partnerships.

Whilst Gambling Commission licensees are allowed to contract out business functions to a third party, social responsibility code provision 1.1.2 of the Commission’s Licence Conditions and Codes of Practice nonetheless makes it clear that ultimate responsibility still sits with the licensed operator. If, therefore, a white-label partner acts in breach of the regulations, it will be the licensee that is held accountable by the Commission.

The full detail of the penalty can be read here.