UK Gambling Commission
but it has emerged as the country’s most enthusiastic enforcer of anti-money laundering rules. Indeed, ten of the 16 enforcement actions taken so far in 2022 reference AML failings. The City of London’s reputation as a money laundering haven 6 could provide an explanation except that, to date, there has been a distinct absence of prosecutions for money laundering failures in major city institutions. Neither is it right to suggest that the UK or UK operators have a worse problem with money laundering through gambling than other jurisdictions: there is no reliable data on the amounts of dirty money washed through gambling accounts. The EU’s most recent supranational report on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities 7 highlights a likely increased risk of gambling being used for money laundering and the financing of terorism but makes no attempt to quantify the situation. The answer for so many AML-related sanctions seems to lie with the Commission’s view that targeting operator AML weaknesses is an effective way to address problem gambling. 8 Guy Wilkes, former head of enforcement at the UK Financial Conduct Authority told the Cambridge International Symposium on Economic Crime in September 2021 that: “the [UK Gambling] Commission uses AML requirements not just to mitigate the risk of what it calls ‘classic’ money laundering, but also as a tool against problem gambling. “Due diligence [is required] at a fairly low level of spend, which far exceeds requirements in any other sector,” he said. In their defense, officials have often warned that compulsive gamblers regularly turn to crime to fund their habit. Whilst they may not cash out as quickly as so-called ‘classic’ money launderers, using illicit funds to gamble still qualifies as money laundering. In February, 2018, the Commission ordered all online gaming companies to review their compliance programs. It had found widespread failures to adopt a risk-based approach to AML and instructed operators to improve record keeping and staff training in this area. It may be that fines are more related to tardiness on the part of operators in taking a more proactive approach to prevention, rather than large numbers of specific cases of money laundering.
The risk of banking services being withdrawn over AML concerns is arguably a bigger threat to the industry than fines suggesting effective leverage in this area could be achieved by other means. Better regulation: The UK Gambling Commission could claim that its enforcement actions mean UK consumers are better protected than those in other countries, but is that the case? Data in this area is problematic with significant differences in the way countries survey and report the prevalence of problem gambling. The UK is at the lower end of the spectrum when it comes to pathological gambling, and high channelization rates would suggest that more problem play is captured within its data. Low levels of problem gambling do pre-date the Gambling Commission’s 2017 enforcement strategy suggesting no proven link between tougher enforcement and harm reduction 9 . Logically, it would seem as easy to use low rates of problem gaming to justify a relaxation in regulation and fines as to make the argument for regulatory tightening. When enforcement actions make reference to individuals or small numbers of people who have not been adequately protected it does beg the question as to whether the level of fines is proportionate to the problem the regulation is trying to tackle. Operator affordability : Whilst the settlements appear very large, they must be looked at in the context of the size and profitability of the operators they impact. Entain’s most recent company results reported global revenues of £3.8 billion with profit before tax of £527 million. The company agreed to pay £5.9 million in 2020 with the same offences sited by the UKGC. It may be that the regulator felt it had to triple the level in order to make its point. Earnings in the gaming industry have taken a hit in recent years and that is before effects of the squeeze on household earnings are considered. Going forward, it should be possible to gain the industry’s attention without larger and larger penalties. Operator indifference : A similar point to that made above, defending enforcement actions can prove more expensive than simply paying up and moving on. If the regulator feels sums are seen simply as a cost of doing business in the UK, then it will be tempted to make its point more strongly. Its comments that the next step would be suspension or license withdrawal, no matter how large the
6 https://www.icaew.com/insights/viewpoints-on-the-news/2022/jun-2022/ec-londongrad-how-the-city-became-a-moneylaundering-haven et al.s 7 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022DC0554. 8 https://www.moneylaundering.com/news/exclusive-to-combat-gambling-epidemic-britain-turns-to-aml-rulebook/ 9 The NHS Health Survey for England included a question on gambling for the first time in 2016 and saw no reason to comment further. https://digital.nhs.uk/ data-and-information/publications/statistical/health-survey-for-england/health-survey-for-england-2016. Subsequent reports have either made no mention of gambling harms or placed it a long way below obbesity, alcohol and smoking as a erious health concern.
IMGL Magazine • November 2022 • 31
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