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This briefing note is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

UK Update: Anti-Money Laundering
 Briefing 
Date
04 March 2016

UK Update: Anti-Money Laundering

On 29 February the Gambling Commission published a document detailing weaknesses identified in the Anti-Money Laundering (AML) controls at Paddy Power, in relation to both its online offering and one of its betting shops.

The Gambling Commission has issued a series of similar statements in respect of betting and casino operators in the last two and a half years. As we highlighted last year, senior personnel at the Gambling Commission have stated that they expect to see further cases of poor AML compliance being exposed in the coming months. With work underway to implement the Fourth Anti-Money Laundering Directive, and the Gambling Commission considering this issue generally as part of an ongoing LCCP review, this issue warrants serious attention.

The key criticisms of Paddy Power focus on:

  • The fact that its AML policy failed to cover the possibility that money laundering could arise as a result of a customer spending the proceeds of crime
  • Insufficient consideration being given to refusing service to a customer who was displaying signs of problem gambling
  • Failure to take reasonable steps to establish source of funds in relation to particular customers
  • Failure to adhere in practice to internal AML policies, including management-level staff failing to respond appropriately to concerns raised by more junior staff

Paddy Power resolved the matters through a voluntary settlement with the Commission involving:

  • The appointment of a third party to review Paddy Power's AML and social responsibility controls across its betting shops, and its AML controls in its online business
  • A commitment to amend its policies and procedures to address the shortcomings identified in the investigation
  • Publication of the attached statement to share learning on these issues with the industry, and an agreement to share its learning to the wider industry
  • A significant payment (£280k) to be directed to socially responsible causes

The document makes for an interesting read and should be reviewed in detail by senior managers and especially Money Laundering Reporting Officers in all sectors.

If you have any questions arising from this, please speak to your usual Mishcon contact or a member of our Betting & Gaming Group.