bet365 criticised over inadequate money laundering controls

bet365 has been pulled up on its anti-money laundering and social responsibility measures by the UK Gambling Commission.

Following an investigation by West Yorkshire Police leading to the conviction of an individual for serious theft and money laundering offences, the Commission conducted its own investigation into potential weaknesses in anti-money laundering (AML) and social responsibility controls put in place by bet365 and found several problems.

In particular it found:

• bet365’s policies and procedures on tackling money laundering did not reflect developing understanding of the issues.
• There was an over-reliance on AML processes in the banking system. The operator considered that it could take some comfort from the fact that virtually all of the payments made by or to the individual were via his personal bank account at a regulated financial institution in the UK. However, it is important to stress to the industry that this is only one of several considerations that operators should take into account when assessing money laundering risk.
• There was also a view taken by the operator, in the absence of any specific directions from the then Serious Organised Crime Agency following the operator’s lodging of two suspicious activity reports (SARs), that it was entitled to continue to trade with the individual. The Commission wishes to stress to the industry that lodging SARs is only one aspect of the requirement to manage money laundering risk.
• Its responsible gambling policies had not developed to take full account of established and developing good practice, for example, in relation to patterns of spends, contacts with customer services and use of multiple debit cards and other payment methods.

In addition, those policies and procedures were not executed effectively:

• Early interactions with the individual were inadequately recorded. Even though the operator’s own thresholds for enhanced due diligence were exceeded on many occasions, the operator kept no deployable records of additional due diligence undertaken with respect to the individual prior to the lodging of the first SAR and so was unable to adequately evidence its decision making.
• The operator did not use open sources of information or data held internally as actively as it could have. For example, it would have been relatively straightforward for the operator to determine from open source information that the individual was a bankrupt, which may have prompted earlier concern about the scale of his gambling.
• Bet limits were increased frequently, with insufficient challenge.
• The operator accepted the customer’s explanation for partial self-exclusion from its casino products at face value and failed to flag up the need to monitor other accounts, although it was required by licence obligations to link them.

The Commission concluded that if the AML systems put in place by the operator and the payment providers it used had worked effectively, it is highly likely that the operator’s relationship with the individual would have ceased much earlier than it did. Furthermore, the operator’s responsible gambling policies, which were built on passive reaction, rather than active interaction, lacked complete effectiveness.

Matthew Hill, Director Regulatory Risk and Analysis, Gambling Commission, said: “This case demonstrates just how much work the gambling industry still has to do before it properly recognises customers at risk. But the investment of the significant funds given up by the operator into research, including into the development of predictive data analytics, to benefit customers and the industry as a whole, has the potential to deliver a positive outcome.”

bet365 has co-operated fully with the Commission and apparently provided considerable assistance in identifying lessons. The operator is taking a number of steps to ensure that risk to the licensing objectives is managed more effectively within its business.

The Commission added: “To provide important context, the events took place during a period when such shortcomings in relation to anti-money laundering and social responsibility controls appear to have been widespread and before the Commission drew to public attention (in autumn 2013) the need for industry to address those shortcomings.”