The Gambling Commission has found “systemic” failings within the AML and social responsibility processes of WHG (International) Limited (that trades as William Hill Online).
Those failings resulted in it repeatedly, over a 21 month period between 2014 and 2016, breaching (a) its licence condition requiring compliance with the Money Laundering Regulations 2007 and (b) LCCP social responsibility code provision 3.4.1 (customer interaction) in its dealings with at least ten customers who used stolen money, or money that may be the proceeds of crime, to gamble.
It has to be said that this is one of the more surprising findings of this nature, given the reputation and status in the international gambling industry arena of not only the William Hill organisation but also its regulatory affairs and compliance team.
If, as they themselves asserted during the Gambling Commission’s investigation, a company the size of William Hill had insufficient staff available to manage the pool of at-risk customers at the relevant times mentioned above, it does raise the question how many other operators will have experienced – and may yet still be experiencing – further such problems. We may get the answer to that question as we learn more about the seventeen remote casino operators mentioned in the Commission’s 4 January letter to all remote casino operators licensed by it, five of which could potentially be facing formal licence reviews.
The level of the £6.2 million financial penalty imposed on William Hill is eye-watering and a firm reminder, as if one were needed, of the Gambling Commission’s considerably more robust enforcement policy about which the industry has heard so much in the last fifteen months. In this case, this figure may yet increase further. Previous regulatory settlements have drawn a line under the sum that operators have had to divest, based on the individual files that have been reviewed by the regulator.
In this case, the Commission has said: “If further incidents of failures relating to this case emerge, WHG will divest any money made from these transactions”.
There are so many lessons to be learned from this that it is difficult to know where to start. The fact that ten customers were allowed to deposit large sums of money linked to criminal offences because inadequate steps were taken to seek information about the source of their funds or to establish whether they were problem gamblers underlines once again how closely linked an operator’s AML and social responsibility controls should be. The responsibility to ensure that is the case rests with senior management.
Indeed, the passage that stands out to me in the public statement is “senior management failure to mitigate risks and failing to have sufficient staff to ensure the processes were effective between November 2014 and August 2016”.
It is made abundantly clear in the Money Laundering Regulations and everything that has emanated from the Commission in the last 5 years that senior management must take ownership of AML and social responsibility risk assessments, policies, procedures and controls. There are many commentators who now think that the industry will only wake up to its responsibilities in this respect when a member of senior management within a company found to have committed failings of the type set out in this latest public statement (and many others before it) has their personal management licence revoked. That day may well be getting nearer with every additional enforcement action that the Commission takes.
William Hill is obliged under the terms of the regulatory settlement to appoint external auditors to review the effectiveness and implementation of its AML and social responsibility policies and procedures “in order to share learning with the wider industry”. When that happens, the industry must sit up and take note more than it now seems some have been doing in recent years.
There are other things to learn immediately of course. For example, the William Hill public statement poses the following questions that it says operators should ask themselves in order to avoid making similar mistakes:
- Are you ensuring you have effective anti-money laundering and social responsibility procedures and are your staff following these procedures?
- Are you sure you have adequate staff numbers to carry out these procedures?
- Are you checking that you know higher risk customers’ source of wealth?
- Are you using all information (including customer spend levels) to identify potential instances of problem gambling?
- Are you keeping accurate records of these interactions?
I would add the following question to the above list:
- Having identified that a customer may be experiencing problems with their gambling, do you intervene and interact with that customer in a proactive and effective manner to reduce the risk of gambling-related harm?
If nothing else, I hope that this latest public statement will sufficiently add to the shockwaves caused by the Commission’s warning in its letter of seven weeks ago to all remote casino operators (about which I wrote in my January Licensing Expert article) so that Sarah Harrison’s successor as CEO of the Commission has reason to send out more positive messages about the British gambling industry than his or her predecessor has done during her time in office.
David Clifton – Director – Clifton Davies Consultancy Limited
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