Back in October, HM Treasury and Home Office published the first UK national risk assessment of money laundering and terrorist financing, which included a money laundering risk rating for a range of sectors, from banking, accountancy and legal service providers through to regulated (casinos) and unregulated (retail betting) gambling.
While the first three were all awarded an overall risk level of high, gambling emerged as low risk, although with some significant caveats. The risk assessment says this is because the sector is ‘relatively small’, that there is ‘considerable scope for further improvement’ and that if the drive within the sector to raise standards were to lapse, the overall risk could rise.
So there’s no room for complacency, as underlined by a public statement issued last month by the Gambling Commission, the UK’s commercial gambling regulator.
It identified ‘serious weaknesses’ in anti money laundering (AML) controls at two casinos run by Caesars Entertainment (UK) Ltd and put operators on notice that issues highlighted in the statement were likely to form the basis of future compliance assessments. They included:
- failure to appropriately assess customer risk – while Caesars carried out customer due diligence (CDD), it ‘was not used as effectively as it should have been’
- Caesars admitted over-reliance on ‘negative indicators’ about customers, including ‘no trace’ results from third party due diligence providers. The commission said that decisions were made with ‘limited and incomplete facts, allowing high risk customers to gamble…without appropriate and adequate due diligence materials to support their level of spend’
- CDD and enhanced due diligence records, and the policies supporting them, ‘were not sufficiently comprehensive to form an effective money laundering control system’
- decision-making records for high-risk customers, such as potential politically exposed persons, were ‘limited and sometimes incomplete’.
The commission gives credit to Caesars for its full co-operation and the way it has acknowledged its shortcomings. Caesars voluntarily proposed a settlement that includes immediately correcting the problems identified, an external review of its AML policies and processes and putting right any weaknesses highlighted, and sharing what it has learned with other gambling operators. It is also handing over £845,000 to ‘socially responsible purposes’.
The commission says it hopes the sector will learn lessons from the case, urging operators ‘to reflect on their own AML policies and procedures in order to address any weaknesses that they may identify’ – so the start of 2016 could be the perfect time for an AML spring clean.
ICA money laundering-related courses and qualifications include the ICA Specialist Certificate in Money Laundering Risk in Betting and Gaming.
If you’re interested in learning with ICT, view all courses in AML, governance, risk and compliance and financial crime prevention here. You can find out more about all our courses at a free ICA Open Day/Roadshow, find out more here.
To stay updated on the latest developments in governance,risk and compliance, anti money laundering and financial crime prevention, please follow us on either LinkedIn, Facebook and Twitter where you are guaranteed to be notified when our next blog post goes live!