Changes made to the LCCP from 31 October 2020 now make it an explicit requirement that casino operating licence holders must notify the Gambling Commission of the director or member of senior management who has been assigned responsibility for the licensee’s compliance with the Money Laundering Regulations[1] (the “Regulations“). The change should prompt casino operators to ensure that such a person has been appointed and reported to the Commission.

The role is distinct from a casino operator’s nominated officer (which should also be reported to the Commission) and operators should take care not to confuse the two.

The requirement to appoint such an individual is not new: it was introduced as an internal control requirement under Regulation 21(1)(a) of the Regulations, which came into force on 26 June 2017. The recent change is simply to make it an explicit reporting obligation under the LCCP.

Senior management / board level responsibility for compliance with the Regulations

Under Regulation 21(1)(a) casino operators must appoint an officer responsible for the operator’s compliance with the Regulations, where this is “appropriate, having regard to the size and nature of the business.” The person so appointed must be a member of the board of directors or be within the operator’s senior management.

There is no clear guidance that we’re aware of to explain how operators should assess whether the nature or size of their business should warrant the appointment of a member of senior management as responsible for compliance with the regulations.

It remains open to casino operators, adopting a risk-based approach, to determine whether it is “appropriate” to appoint an officer to this position. The person should have a developed understanding of the operator’s AML risk controls and sufficient seniority to take decisions which affect the operator’s risk exposure, though they need not necessarily be a member of the board of directors.

Nominated Officer

Regulation 21(3) imposes a separate obligation on casino operators to appoint a ‘nominated officer’, who must receive internal money laundering disclosures in the form of suspicious activity reports, or SARs, under s.330 of the Proceeds of Crime Act 2002 (“POCA“), and, if necessary, report these to the National Crime Agency. It is distinct from the role carried out by the member of senior management allocated with responsibility for compliance with the Regulations.

The nominated officer is responsible for monitoring the day-to-day operation of the operator’s AML/CTF policies and should be the focal point for all activity within the operator relating to AML/CTF. They are expected to apply the same rigour in their approach to managing money laundering and terrorist financing risk as the operator does in managing its commercial systems.

Can the appointed member of senior management also be the Nominated Officer?

In short, yes, but in appropriate circumstances.

Respondents to the consultation which introduced the changes to the LCCP questioned whether it would be acceptable for a single employee to hold both of these roles. However, the consultation response did not publish the Commission’s position, and instead explained that the Commission intends to consult on the status of the nominated officer role later this year. Clearly further guidance would be welcome.

There appears to be no legal reason which would prevent the same person holding both roles; neither the Regulations themselves nor any related legislation attempt to impart this condition on the appointments. The Commission’s January 2020 Guidance for casinos on the prevention of money laundering and combating the financing of terrorism[2] recognises that “…some operators (particularly small scale operators)…” may be structured in a way that will cause the role carried out by a nominated officer to overlap with other compliance roles.[3] However, affected operators will need to satisfy themselves as to whether the two roles can be carried out by the same person, after giving due consideration to the nature and size of their business, and to the operator’s risk-based approach.

[1] The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692)

[2] https://www.gamblingcommission.gov.uk/PDF/AML/Prevention-of-Money-Laundering-and-Combating-the-Financing-of-Terrorism-5th-Edition.pdf

[3] January 2019 Advice, paragraph 20.10; January 2020 Guidance, paragraph 5.9