A recent ruling in relation to one prominent gambling operator’s inability to adequately identify problem gambling, or to identify money laundering, could have significant implications for other operators in terms of the ever-changing shape of future compliance assessments.
The news comes after online gambling operator Stan James Online was subjected to a regulatory investigation at the hands of the Gambling Commission, following a police report pertaining to an anonymous individual previously convicted of gambling using stolen money.
Specifically, SJU Limited trading as Stan James Online was investigated by the Commission in relation to an individual who had been convicted of stealing from his employer, and had subsequently deposited some of the stolen funds with the operator.
According to reports, the anonymous individual had lost a total of £40,000 via the SJU’s online services.
Following its investigation, the Gambling Commission found that SJU had breached social responsibility (SR) code provision 3.4.1, in that its gambling policy did not meet the standards required in terms of customer interaction in instances where a customer’s behaviour may be interpreted as indicative of ‘problem gambling’.
According to the Commission’s findings, the anonymous customer in question lost some £40,000 with SJU between 1 November 2014 and 30 October 2017 via frequent gambling activity.
During this period, the Commission found that social responsibility interactions between the operator and the individual were limited solely to email correspondence containing “social responsibility sign posting.”
In its findings, the Commission noted: “The emails were triggered by purely monetary alerts and did not take the holistic view of the customer’s gambling activities that we would have expected.”
Upon analysing SJU’s existing policies, the Commission added that “inadequate policy and procedures were a contributory factor in the failure of the licensee to identify and effectively interact with the customer.”
This was flagged up as a particular concern after its investigations also revealed that the anonymous customer had opted to self-exclude from casino products back in 2011.
The Commission also found that SJU had failed to adhere to financial requirements in terms of anti-money laundering (AML), after its investigation found that the customer had effectively gambled a grand total of £137,000 with the operator over the two year period.
SJU failed to follow the Gambling Commission’s guidelines in terms of operators’ duties and responsibilities under the Proceeds of Crime Act 2002, in that this amount was gambled by the customer without exceeding any AML thresholds with the operator, and without the customer being subjected to any checks to determine the source of the substantial funds.
As a result of this, the Commission found that the SJU had not acted in accordance with ‘Ordinary code provision 2.1.2 Anti-money laundering – other than casino’ – an offence which would be deemed a breach of licence condition following the publication of revised licence codes and codes of practice (LCCP) in October last year.
The SJU was made to pay a penalty package as a result of the failings outlined by the investigation. This package involved a payment in lieu of a financial penalty in the sum of £40,000, including a contribution towards the Commission’s costs of investigating the matter from the outset.
The operator was also ordered to pay a further £40,000 in order to reimburse the initial victim – i.e. the anonymous customer’s employer from whom the initial funds were stolen.
Since the case drew to a close, the SJU has reportedly made immediate improvements to its responsible gambling and anti-money laundering procedures.
Nevertheless, the Gambling Commission has stressed that SJU’s failings should be seen as “lessons to be learned by the wider industry”.
In its conclusion, the Commission said: “We consider that this case provides further learning for remote and non-remote operators.
“Operators must ensure that they are making use of all relevant sources of information to ensure effective decision making in respect of anti-money laundering and responsible gambling issues.
“In addition operators should constantly review their policies and procedures and staff training to ensure they are effective and remain relevant.”
The Gambling Commission’s full decision can be viewed here.
Partner – Joint-Head of Licensing, Gaming & Regulatory
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This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.
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