Two birds with one stone: Gambling Commission examines sanctions compliance alongside AML procedures

On 4 April 2024, the Gambling Commission (the Commission) announced the imposition of a £582,120 fine on a major UK gambling company for its failure to comply with anti-money laundering (AML), sanctions and other social responsibility obligations. The fine was issued following a compliance assessment carried out by the Commission in March 2022. 

The fine was imposed for failures identified within the company’s operating subsidiary companies, including that:

1. enhanced due diligence triggers in place were ineffective at managing money laundering risk;
2. financial sanctions checks were not carried out on new customers prior to their first deposits; and
3. independent verification checks were not carried out and too much reliance was placed on customers’ self-verification of their information (including identification documents).

The fine is notable in addressing both AML and sanctions breaches together. Given the areas of overlap between AML and sanctions, we expect to see an increase in the use of this type of joined up enforcement.  

This fine and the commentary accompanying it serve as an important reminder to all firms in the regulated sector (and not just gambling firms) of the need for continuous risk monitoring and ensuring their compliance policies and procedures are updated accordingly. As is clear, failure to do so can result in fines, negative publicity and potentially more severe penalties.

In its public statement accompanying the announcement of the fine, the Commission set out a number of useful prompts to firms when reviewing their compliance arrangements. While these are directed at gambling operators, they are applicable to all firms in the regulated sector and they illustrate many of the key aspects that regulators look for when assessing a firm’s compliance arrangements. These questions include the following.

• Do you have formal processes in place to measure the effectiveness of your AML policies, and are findings adequately recorded?
• Do you efficiently record all compliance-related decisions and are you able to demonstrate, on request, evidence of ongoing assessment, evaluation and improvement?
• Do lessons learned from public statements flow into your policies and procedures?
• Do you undertake financial sanctions checks on new customers at an appropriate time?
• Are your customer risk profiles informed by or linked to your AML risk assessment?
• Have your staff received sufficient training?

These questions highlight the importance of record keeping and continuous monitoring and review of compliance arrangements. They also underscore the fact that procedures implemented to control money laundering risk can be adapted to address other regulatory requirements. While many firms will have written policies and procedures in place, regulators will require firms to be able to demonstrate effective implementation that achieves concrete outcomes in practice, not just on paper.