On 27 April 2016 the Gambling Commission published a document detailing weaknesses identified in the Anti-Money Laundering (AML) controls within the Gala Coral Group, relating to a customer who spent c. £846,000 gambling with Gala Coral's online and retail operations. It subsequently emerged that the customer had stolen significant sums (c. £800,000) from a vulnerable adult.
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 in November 2015, 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 the Gala Coral Group focus on:
- An initial failure to link together the customer's online and retail activities (which would have revealed the scale of the gambling more quickly)
- Insufficient open source evidence being used to establish source of funds
- An over-reliance on the customer's assurance that he came from a wealthy family (when open source evidence would have suggested that this was not likely)
- A failure to investigate the situation quickly enough, despite the volume and value of bets being placed by the customer, and the scale of his initial deposits into his online account
The Gambling Commission highlighted the need for ongoing monitoring of customers, because risk profiles may increase or decrease over time. A customer's risk profile may need to be reassessed based on emerging factors, which may include significant changes in gambling patterns. In this instance, the Gambling Commission indicated that the significant increase in both the volume and value of bets and time spent gambling by the customer should have led to a formal review by the operator of whether the customer posed a social responsibility risk.
The Gala Coral Group resolved matters through a voluntary settlement with the Commission, which included a significant payment (£846,000) to the victim of the theft.
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.