U.K. Regulator Investigating 17 iGaming Operators Over Money Laundering & Problem Gambling

The United Kingdom Gambling Commission (UKGC) has warned each of the 195 iGaming operators within its jurisdiction, directing them to review policies on money laundering and problem gambling prevention.

In a form letter dated January 4, operators were updated on the findings of a recent UKGC compliance assessment.

The regulator focused on each company’s adherence to crucial regulations – including the Proceeds of Crime Act of 2002 (POCA) and the Money Laundering, Terrorist Financing, and Transfer of Funds Regulations of 2017 – designed to prevent criminal elements from laundering funds through online gambling.

Additionally, the UKGC examined how operators have implemented Breach of Social responsibility (SR) code provision 3.4.1.1(e) which states “licensees must put into effect policies and procedures for customer interactions where they have concerns that a customer’s behaviour may indicate problem gambling.”

According to the letter, the UKGC has already opened active investigations into 17 operators concerning their compliance with either, or both, of the regulations. Furthermore, the agency revealed that five operators will have their licenses subject to review under section 116 of the Gambling Act of 2005.

The operators in question were not mentioned by company name or license number.

In an accompanying statement, UKGC chief executive Sarah Harrison explained the letter’s intent:

“It is vital that the gambling industry takes its duty to protect consumers and keep crime out of gambling seriously.

The Gambling Commission’s new strategy sets out our vision for a fairer and safer gambling market.

The action we are taking to examine online casino operators’ compliance with money laundering and customer interaction requirements is just one example of how we will be relentless in turning that vision into reality.”

The letter identified several widespread deficiencies within the industry.

When employees who have been designated as Money Laundering Reporting Officers (MLRO) were tested on their knowledge, the UKGC found that some “were unable to provide suitable explanations as to what constitutes money laundering and had no understanding of the main principles under POCA.”

The agency also determined that Suspicious Activity Reports (SROs) were routinely submitted to the National Crime Agency (NCA) and Financial Intelligence Unit (FIU), operators largely ignored recommendations provided in return.

Operators in the U.K. are also required to screen data pertaining to player activity – including deposits and wagers – to identify users exhibiting symptoms consistent with problem gambling. When players exhibiting addictive tendencies were spotted, operators regularly failed to initiate the required “customer interactions,” such as informing players about their ability to impose betting limits, or making self-exclusion readily available.

In the letter, the UKGC made it clear that these customer interactions were made infrequently, even when operators had evidence that problem gambling may be occurring:

“We reviewed a large number of customer accounts during the assessments and identified potential signs of problem gambling based on consumers’ gambling pattern and spend. In many cases, however, this behaviour did not trigger a customer interaction.

Customer account records did not show any evidence of customer interactions taking place and operators were of the view that these customers did not raise any concerns.”

While the letter was limited to current regulations, Harrison made it clear that the UKGC is continually updating and adjusting its policies to reflect the iGaming industry’s ongoing evolution:

“As the online sector continues to grow, and now accounts for a third of the British gambling market, it is right that we maintain a sharp focus on online gambling.

That is why in addition to our work on compliance among online casino operators, we have also been conducting a wider ranging review of online gambling looking at how the market has evolved and to identify where further action can be taken to make gambling fairer and safer for consumers.”