The Gambling Commission has told the industry it needs to be seen to ‘step up on social responsibility’ after Platinum Gaming, which is licensed to operate Unibet.co.uk and uk.bingo.com, became the latest company to make expensive failures in its social responsibility and anti-money laundering procedures.
Following a Gambling Commission investigation, the company has agreed to pay £1.6 million in a settlement with the UK regulator.
Richard Watson, Gambling Commission Executive Director, said: “There were weaknesses in Platinum Gaming’s systems and as a consequence, more than half a million pounds of stolen money flowed through the business. This is not acceptable and I would urge all operators to carefully read this case and learn lessons so they don’t make the same mistakes.
“This is yet another example of us taking firm action against online operators who fail to protect consumers or implement effective safeguards against money laundering. We must see the industry stepping up and providing consumers in Great Britain with the safest and fairest gambling market in the world. Where we continue to see failings, we will continue to take action.”
The investigation started as a result of information passed to the Commission regarding a customer who had been convicted of a £2m fraud and had been spending stolen money through several gambling operators.
This convicted fraudster had spent £629,420 of stolen money with Platinum Gaming and the investigation discovered that the customer’s deposits were ‘so high and losses so significant’ that Platinum Gaming should have considered refusing or barring service to the customer. Instead the operator continued to allow the customer to gamble.
Investigations also revealed the operator breached anti-money laundering regulations, including a failure to make adequate enquiries about the source of the funds the customer used to gamble.
The Commission said that the management of this customer in relation to social responsibility and anti-money laundering ‘raised significant concerns’ regarding the effectiveness of Platinum Gaming’s policies and procedures that were in place at that time, and its management of risks to the licensing objectives.
As part of a settlement with the Commission, Platinum Gaming returned £629,420 to the fraudster’s victims and will pay £990,200 in lieu of a financial penalty. This money will be spent accelerating delivery of the National Strategy to Reduce Gambling Harms.
However, the regulator said the firm was not subject to a review of its licence because this appeared to be an isolated incident. The Commission found that Platinum Gaming had ‘moved forward since the time of this incident, with clear improvements in areas where these failings were found to have occurred’.
PGL acknowledged its shortcomings at an early stage after initial engagement from the Commission and accepted that it failed to act in accordance with the Licence Conditions and Codes of Practice (LCCP), the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the 2017 Regulations) and our guidance on money laundering and terrorist financing.
Below is an extract of the Gambling Commission’s public statement, detailing some of the customer behaviour and where Platinum Gaming (PGL) found its procedures lacking:
This customer opened their account with PGL on 24 February 2017 and was registered as a VIP customer on the 26 February 2017.
This customer gambled frequently, at various times during the day and evening and even overnight. Whilst they were initially winning, high deposits with reversed withdrawals became more apparent, resulting in significant losses over a period of 11 days.
The customer stopped gambling with the operator in March 2017 but resumed their activity in October 2017 where, in 21 days, they were allowed to gamble and lose 10 times the amount they had gambled previously.
The operator failed to make use of all available information they held on this customer to ensure effective decision making. This was particularly concerning given that the customer had been identified as high value or VIP.
Whilst the operator identified and flagged the customer as a high-risk player and that SOF (source of funds) should be obtained as they may not be playing within their means, PGL failed to make adequate enquiries about the SOF used to gamble.
PGL also failed to apply EDD (enhanced due diligence) and ongoing monitoring properly on a risk-sensitive basis contrary to Regulation 14 of the 2017 Regulations. This regulation requires operators to apply additional measures to establish and verify the customer’s identity, and to scrutinise the transactions undertaken by the customer (including their SOF) in situations which, by their nature, present a higher risk of money laundering.
PGL identified the customer as high risk due to their deposits, level of play, and the fact that they believed they did not have requisite funds to support this level of gambling. As a result, PGL subsequently submitted a Suspicious Activity Report (SAR). Despite the submission of a SAR, the customer was not asked to provide any SOF information.
The customer returned to PGL five months later on 12 October 2017 where he was detected again because of high deposits. Even though PGL originally identified the risk associated with this customer in March 2017, the customer was able to recommence gambling without any further verification taking place in respect of SOF.
On the 30 October 2017 (18 days after returning) PGL requested source of wealth information via a questionnaire which was answered the same day. This subsequently prompted a SOF request which the customer did not co-operate with and the account was closed on the 7 November 2017.
Between the 12 October 2017 and the 2 November 2017, a total of just 21 days, the customer deposited £651,370 and lost £619,420.
The fact that they were able to return in October 2017 and deposit and lose such significant amounts of money clearly shows that PGL’s policies and procedures were not fit for purpose.
The Commission notes PGL’s position that this incident was in part down to human error and a failure to follow up on the concerns that were previously identified during the initial engagement with the customer in March 2017.