Gambling Commission cites a “low level of understanding” of the risk-based approach to AML regulation as a primary reason for enforcement action

HomeInsightsGambling Commission cites a “low level of understanding” of the risk-based approach to AML regulation as a primary reason for enforcement action

The Gambling Commission’s supervisory activity relating to anti-money laundering (AML) and counter-terrorist financing (CTF) has been highlighted in the latest Treasury report on AML/CTF supervision.

The report, published in August, gives an overview of the work of the various supervisory authorities in the UK which oversee the implementation of AML and CTF legislation in their various sectors, including the Gambling Commission.

The Gambling Commission’s risk assessment assesses all casinos as high risk. The Treasury’s report notes that, of the 208 casinos it monitors, the Commission assesses 88 casinos as “higher-risk,” of which, 19 are land-based, 62 are online and 7 hold a licence allowing them to do both. The Gambling Commission reaches this greater granularity of risk by separating those casinos with higher impact and higher likelihood of risk based on many risk indicators, including the size of the operator and the perceived level of an operator’s compliance.

It will come as no surprise to readers of this blog that the Commission’s supervisory activity increased in 2018/2019. During the period 6 April 2018 to 5 April 2019, the Commission carried out enforcement activity with fines totalling £17 million (compared to £6.4 million in 2017-18), an increase of over 250%. The Commission also issued 11 operators with warnings, imposed additional conditions on 3 operators’ licences and revoked one operator’s licence. The decisions are published online, acting as a further deterrent to the operators involved.

Failings in compliance with AML/CTF regulations amongst casinos are assessed by the Commission through a mixture of desk-based research (DBR) and onsite visits. The Commission reported that 34% of the firms subject to a DBR, and 67% of the firms visited, were assessed as non-compliant.

A common factor identified by the Commission in non-compliant casinos was a level of misunderstanding of the risk-based approach to AML/CTF set out in the Money Laundering Regulations, and in the Gambling Commission’s guidance on the subject to casinos.

This report shows that the Gambling Commission is determined to crack down on non-compliance by operators. Although the report also highlighted that the UK has some of the toughest systems for combatting money laundering and terrorist financing in the world, there is still scope for significant sanctions for any failure to follow the legislation and the guidance issued by the Commission.

You can read the full report here. (The sections relevant to the Gambling Commission are at pages 17-19 and 35-37).