The announcement by the UK Gambling Commission (UKGC) that Gibraltar-based Betfred.com is the most recent recipient of a hefty financial penalty for AML failings has served to raise once again the question why so many overseas-based remote operators have run into such problems with the UK regulator.
In the Betfred case, it has not just been a case of concern about the effectiveness of its AML policies and procedures (including failure to conduct effective source of funds checks) but also the need to carry out effective customer interactions that has resulted in the UKGC’s enforcement action.
This highlights the need for all UK licensed operators to ensure that they not only take on board the Commission’s detailed guidance that comes into force when the customer interaction LCCP provisions are updated on 31 October but also ensure that their staff have been properly trained on the ‘identify – interact – evaluate’ principles that represent the three key outcomes within that guidance, as explained in my August 2019 Licensing Expert article for SBC news.
So why is it that gambling regulators in different jurisdictions seem to impose different expectations in terms of regulatory standards? After all, the Money Laundering Regulations in each EU Member State are based on the very same EU Directive. In an ideal world, an international remote gambling operator would have one set of AML policies and procedures that it could apply in relation to each country from which it takes custom.
If we all lived in that ideal world, the same would be true in terms of consumer protection. Only last month the European Gaming & Betting Association (EGBA) said:
“Alongside the diverging national rules for consumer protection in online gambling, national enforcement tools like geo-blockings and payment-blockings jeopardise consumer safety by pushing EU consumers towards betting websites operated outside the jurisdiction and reach of the EU.”
EGBA went on to call for – “the introduction of a single set of rules applicable across all Member States would correct this, help better regulate Europe’s online gambling activities and provide higher standards of consumer protection”, adding that – “the creation of a single rulebook for online gambling would also lessen significant administrative duplication for European businesses”.
Many consider creation of this ideal world to be an impossible dream, borne out by the failure of EU Member States to implement fully a Recommendation on principles for the protection of consumers and players of online gambling services and the prevention of minors from gambling issued by the European Commission back in 2014.
A study by London’s City University, published last December, found that the recommendation – designed to ensure a high level of protection for consumers and minors through the adoption of principles for online gambling services and for responsible advertising and sponsorship – has been implemented fully by only one EU Member State (Denmark) whilst three (Ireland, the Netherlands and Slovenia) currently have no regulations for online gambling, meaning that EU consumers are being exposed to varying degrees of consumer protection, many of which are inadequate.
However, if as EGBA hopes, the ideal world described above might one day be achieved, some hoping for less robust regulation elsewhere than exists in the UK now may not rue Brexit taking place within the imminent future (if indeed it does).
I say that because the UKGC has most certainly set a very fast pace towards fulfilling its CEO’s ambition delivered at its ‘Raising Standards’ conference last November, when he said:
“I want gambling consumers in Britain to be able to enjoy the fairest and safest gambling in the world ….. I want the Gambling Commission to be the most respected gambling regulator in the world.”
That clear expression of intent was made during a calendar year in which the UKGC imposed fines and financial penalties totalling £28million on a variety of operators for AML and social responsibility failings.
So far during 2019, at a time when UK regulatory requirements are becoming ever more stringent, total penalties imposed on operators licensed by the UKGC are approaching £16million. Three of the operators were also licensed by the Malta Gaming Authority (MGA) and two have since surrendered their UK licences.
Another Maltese operator, Maxent, has had its UK licence revoked, although revocation has stayed pending the outcome of an appeal. Regulatory investigations are continuing into other operators based in Malta, including white label operators FSB Technology and EveryMatrix, the latter of which had its B2C operating licence suspended before it volunteered to “let go” of that licence last month, due to its white label business becoming “unsalvageable”.
A speech by the UKGC’s CEO earlier this month, in which he listed matters of particular current concern to the regulator, clearly indicated that UK licence-holders will witness yet further regulatory developments over the coming months.
That is not to suggest for one moment that other European regulators are not toughening up their acts. We know that (a) Spain is not alone amongst other countries in considering following Italy’s lead in banning all gambling advertising and (b) it is not only the Dutch regulator that is levying substantial fines for unlicensed online gambling activities.
However, it is the hard line taken by Sweden’s regulator, Spelinspektionen, since the introduction of new gambling legislation opening up the market at the beginning of this year, that has been particularly raising eyebrows within the online gambling sector, including in relation to its revocation of the licence held by Ninja Casino operator Safent (a subsidiary of MGA licensed Global Gaming Entertainment Group), for “serious failings in its social responsibility and anti-money laundering controls”. It has taken enforcement action against other MGA licensed operators for failures to adhere to self-exclusion rules and breaches of other regulations.
For its part, since substantially overhauling its regulatory framework last year under new gambling legislation designed to strengthen its oversight of the industry (including in relation to consumer protection), the MGA has so far this year cancelled eighteen gambling authorisations and suspended seven others. It has also recently established a Commercial Communications Committee whose main function will be to review commercial marketing and advertising communications brought to its attention in order to assess whether any possible breaches of the its Commercial Communications Guidelines have occurred. It has also created a new Sports Integrity Unit.
Discussion on all of the above and more will feature in the forthcoming free-to-attend ‘Safeguarding Standards – a cross country snapshot’ conference, hosted by my company Clifton Davies Consultancy Limited and Valletta based boutique law firm City Legal, that is being held at the Dragonara Casino in Malta on Thursday 17 October.
Likely to be an interesting prelude to SBC Events’ unmissable CasinoBeats’ Malta 2020 conference, details of the ‘Safeguarding Standards’ conference can be found on the Clifton Davies website. Anyone wanting to attend should please let me know as soon as possible.
David Clifton – Director – Clifton Davies Consultancy Limited