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UK – UK Gambling Commission tells industry to toughen up on anti-money laundering

By - 10 September 2015

The UK Gambling Commission has told the British gambling industry it must act on the lessons that have emerged from recent investigations into anti-money laundering and social responsibility shortcomings in Grosvenor Casinos and meccabingo.com.

It said the industry must critically review the effectiveness of their policies and procedures to prevent gambling being used to support crime or risk more formal regulatory action.

The Commission has recently completed an investigation of weaknesses in anti-money laundering controls at Rank Group’s Grosvenor Casinos prompted by the money laundering conviction of a former leading customer, Mr Da Feng Ding.

The Commission has investigated a separate case involving Customer B, a Rank meccabingo.com customer who is awaiting sentencing after recently pleading guilty to defrauding a six-figure sum from her employers.

As a result of the investigations, Rank has acknowledged serious shortcomings and failures to apply the lessons learnt from previous scrutiny. The Commission has agreed the operator’s remedial actions including a third party audit of its revised anti-money laundering arrangements and the surrender of an estimated £950,000 profits that resulted from these shortcomings, to be spent for agreed socially responsible purposes.

In the first case the Commission investigated Grosvenor’s handling of its relationship with a Mr Ding, who spent a large volume of cash over a period of approximately three years from 2008 to 2011. The Commission’s ruled that Grosvenor failed to take an effective and timely action to verify the identity of the customer. It failed to take a sufficiently robust and risk-based approach in establishing the customer’s source of funds and failed to take appropriate action when Grosvenor staff had suspicions about the customer’s transactions or when it would have been reasonable for them to have had such suspicions. It also failed to take and keep adequate records and misunderstood its responsibilities in relation to the Proceeds of Crime Act 2002, particularly in relation to the reporting of suspicious activities to law enforcement agencies.

In the second unrelated case, Customer B was able to gamble a six-figure sum without Rank Digital undertaking sufficient AML checks or undertaking adequate monitoring from a social responsibility perspective.

Rank Group is now undertaking a critical review of its anti-money laundering controls within the business, led by an external provider.

The Gambling Commission said the industry should be monitoring whether it has appropriate and risk-sensitive policies and procedures relating to the prevention of money laundering and ensuring that people are not exploited or harmed by gambling are being followed effectively.

Operators must manage the risk of money laundering by taking a range of measures, including a consideration of where the money a customer is gambling with comes from and making sure that money laundering risks relating to established customers are monitored effectively on an ongoing basis.
Operators take an appropriate range of actions, including both making an appropriate disclosure to law enforcement agencies and reviewing whether to continue with the business relationship with the customer in question. The Commission is bringing to the attention of all operators the need to take a critical approach to assessing their own policies and procedures and, crucially, whether they are being followed and remain fit for purpose, to avoid generating a false sense of security.

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