Record £11.6m fine for Betway over AML failings
13 Mar 2020
Online gambling business Betway has been slapped with a record £11.6m fine by the sector’s regulator for a series of social responsibility and anti-money laundering (AML) failings relating to seven of its high spending customers over a four-year period, reports Pat Sweet
13 Mar 2020
In addition, the Gambling Commission is requiring the company to implement a package of measures, after its investigation found that a lack of checks on the source of funds meant Betway allowed £5.8m of money to flow through the business which has been found, or could reasonably be suspected to be, proceeds of crime.
The majority of this money will now be divested and returned to victims.
The regulator’s probe also revealed inadequate management oversight, and investigations into responsible personal management licence holders are ongoing.
In one instance uncovered by the Gambling Commission, Betway failed to carry out source of funds checks on a ‘VIP’ customer who deposited over £8m and lost over £4m during a four-year period.
In another, Betway failed to carry out effective social responsibility interactions with a customer who deposited and lost £187,000 in two days.
Richard Watson, executive director at the Gambling Commission, said: ‘The actions of Betway suggest there was little regard for the welfare of its VIP customers or the impact on those around them.
‘As part of our ongoing programme of work to make gambling safer we are pushing the industry to make rapid progress on the areas that we consider will have the most significant impact to protect consumers.
‘The treatment and handling of high value customers is a significant piece of that work and operators are in no doubt about the need to tackle the issue at speed.’
The Commission investigated Betway’s handling of seven customers’ accounts, predominantly treated as VIPs, following complaints from customers and reports from other agencies.
Three customers had been the subject of police investigations and, following these investigations, it was established that stolen money had been spent on online with Betway.
The regulator identified ‘systemic historical failings’ in the way Betway identified and interacted with customers who were at higher risk of money laundering and problem gambling.
The Gambling Commission said Betway had cooperated with its enquiries and accepted that between November 2014 and December 2018 it failed to put in place and implement the measures described in the Money Laundering Regulations 2007 and of the Money Laundering Regulations 2017.
In one instance, a customer held 11 separate accounts with Betway. The customer deposited more than £494,000 over a period of one year and five months, £300,000 of which was over five months, and was the subject of 18 reviews by Betway’s risk and fraud team.
Betway did not undertake any checks to establish the source of funds as the customer failed to trigger any of Betway’s financial thresholds in place at the time. The individual has subsequently been convicted of fraud.
In another case a customer deposited over £200,000 within 21 days and withdrew the same amount. Know your customer checks had been undertaken by Betway.
However, it did not adequately evaluate other material supplied by the customer to establish their source of funds. The customer later deposited over £450,000 in a month and Betway failed to undertake any customer interactions with the customer over this period.
In a third example, a customer deposited £299,000 over 11 days and lost more than £80,000. Betway undertook open source checks on the customer however, it did not undertake sufficient checks to verify the information related to its customer and only asked for documents to support their source of funds after the customer had withdrawn £200,000. The customer has subsequently been convicted of fraud.
The company will pay £5.8m in lieu of a financial penalty and will divest a total of £5.8m gained as a result of these findings.
Betway has agreed to an independent review of current policies and processes, its operation, resourcing, quality control and oversight. It will also carry out a compliance led review of all current / active UK customers who have not been reviewed in the past six months and review applying its current processes for AML and social responsibility.
In addition, the gambling operator is to undertake a full assessment of its top 25 customers by gross gambling yield (GGY) and top 25 customers by deposit for years 2015, 2016, 2017 and 2018 and, where any similar failings are identified, additional divestments will be made where appropriate.