MONEY LAUNDERING
attractiveness of online gambling may increase but the industry is not the only one that can be targeted. The North Korean hackers diverted funds through a Sri Lankan charity paying ten percent “commission” for the organization to wash US$ several million through its accounts. 22 In March 2023, the Gambling Commission announced enforcement action against Kindred brands 32Red and Platinum Gaming making the following points about AML failures: • 32Red failed to thoroughly implement the measures described by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer Regulations 2017). • The customer account reviews identified that financial triggers for Anti-Money Laundering reviews at 32Red were too high and not appropriate to effectively manage money laundering and terrorist financing risks. Inappropriate controls allowed significant levels of gambling to take place within a short space of time without the operator knowing anything about customers’ financial situations. • 32Red customers subject to a Source of Funds (SOF) / Source of Wealth (SOW) request were, in most cases, not restricted from depositing and gambling during the two-week period allowed by the operator to respond to the request. This resulted in further significant depositing and loss activity occurring. • In relation to 32 Red, there was an over reliance on confidence that funds coming through Financial Conduct Authority (FCA) regulated firms mitigated/removed proceeds of crime risk. • One 32Red account was not deposit blocked, in line with its own policy and procedures, after an information request deadline had expired. This allowed the customer to continue depositing, gambling £16,280 in total and losing £8,321 for a further two
weeks until their account was blocked. • Platinum Gaming’s policies, procedures and controls in relation to AML were not appropriate. • Platinum Gaming failed to ensure that its policies, procedures and controls were kept under review and revised appropriately to ensure that they remained effective. 23 There is no suggestion in any of the points that any actual money laundering of the traditional kind has taken place. As Duncan and Lord say, there is a greater focus on identifying non- compliance than in understanding how organized criminals may use online gambling to launder large amounts of money. 24 In the William Hill case later in the same month, AML failures included allowing customers to deposit large amounts without carrying out appropriate checks – one customer was able to spend and lose £70,134 in a month, another to lose £38,000 in five weeks, and another to lose £36,000 in four days. The sums involved, whilst large, are not evidence of organized money laundering. Andrew Rhodes, CEO of UKGC, admitted as much when he spoke to the BBC. “What we found were serious non-compliance failures. I’m not saying this money was from criminal enterprise, but we must have safeguards and checks in place.” Pathological gamblers’ technical breach of money laundering rules, i.e. gambling with the proceeds of crime, has provided cover for the UKGC to use greater powers under AML regulations to penalise operators. No one is denying or condoning the egregious examples of individuals being allowed unchecked to gamble sums which are way beyond any reasonable assessment of what they can afford. But to lump them in with international crime gangs or give the impression that operators are in some way colluding with money launders feels disingenuous.
PHIL SAVAGE Head of Publications and European Affairs, IMGL For information contact +44 7778 635836 phil@imgl.org
22 Geoff White, The Lazarus Heist 23 https://www.gamblingcommission.gov.uk/news/article/gambling-commission-fines-32red-and-platinum-gam- ing-gbp7-1m 24 Duncan, P. & Lord, N. (2022) ‘Organized crime money laundering through online gambling businesses in Great Britain’
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IMGL MAGAZINE | APRIL 2023
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