Hot streak: more enforcement action from the UK Gambling Commission for AML failures

The UK Gambling Commission (UKGC) has announced a £6m fine against another gambling company as a result of social responsibility and anti-money laundering (AML) failures. This comes hot on the heels of a similar fine of £3.4m imposed by the UKGC last week, on which we also commented.

This appears to mark a notable trend of AML enforcement activity by the regulator and there are important lessons to be learnt for any firm subject to AML supervision.

In addition to the fine, and consistent with the UKGC’s enforcement action last week, the sanctioned firm will be required to instruct auditors at its own expense to ensure it effectively implements new policies, procedures and controls that comply with the UKGC’s licence conditions and codes of practice.

Key AML failures uncovered by the UKGC included:

• customers were allowed to deposit significant sums of money without sufficient AML checks being conducted (it is notable that failures in enhanced customer due diligence were also a basis for the fine announced last week);
• Source of funds (SOF) checks were insufficient (likewise, SOF failings were highlighted in last week’s fine);
• bank statements produced were not assessed appropriately;
• inadequate checks of documentation for authenticity;
• no assessment or limit of how much a customer should be allowed to spend based on known income, wealth or any other risk factors; and
• not ensuring that its policies, procedures and controls were implemented effectively, kept under review or revised appropriately to ensure that they remain effective and take into account any applicable learning or guidelines published by the Commission from time to time.

The increased frequency of activity by the UKGC and other bodies indicates that regulators are becoming more willing to enforce against AML failures. Firms should take careful note that any AML measures they may have in place that are not followed through and implemented in substance are unlikely to be adequate. Compliance arrangements must be effectively implemented and frequently reviewed.