What are the odds? What the William Hill fine means for you

Bovill

Today’s news that the William Hill will face penalties of at least £6.2m following settlement with the Gambling Commission will have sent shock waves across the industry.

This is the second largest financial penalty levied by the Commission, and the highest in relation to financial crime concerns. Other gaming firms should take note and swiftly take action to assess their own risk and control environment. Senior management were specifically referenced in the notice for failing to mitigate risks and failing to have a sufficient number of staff to ensure the firm’s AML controls were effective between November 2014 and August 2016.

The William Hill Regulatory Settlement notice cited that ten customers have been, or are currently subject to, police investigations into theft or money laundering, which had gone unnoticed by the gaming operator. The notice states a wide range of issues relating to:

  • Know your customer: The firm failed to recognise what constitutes reasonable behaviour for certain customers. In particular this related to high value deposits with limited understanding (or questioning) around employment status. Assumptions of customer’s earnings were based on deposits rather than facts leading to an estimated salary of over £300k when in fact the reality was closer to £30k.
  • Source of funds: A customer deposited over £650k over a nine month period with no checks on the source of funds.
  • Escalations: Although some matters were escalated, either manually or through system alerts, responses were very slow. This meant customers were able to continue gambling for six months despite alerts continuing to be generated. A lack of resource was cited as one reason for the delays.
  • Superficial checks: Where concerns were raised, controls appeared to be lax. The settlement notes that verbal confirmations were accepted at face value with no follow up. Additionally, the firm appeared to rely on automated social responsibility alerts being sent to customers with very high deposits and associated losses.

The settlement notice calls out a number of self-assessment questions, which we have elaborated on below:

  • Are you ensuring you have effective anti-money laundering procedures and are your staff following these procedures? How do you know this?
  • Are you sure you have adequate staff numbers to carry out these procedures?
  • Are you checking that you know higher risk customers’ source of funds and wealth?
  • Are you using all information (including employment information) to identify potential instances of criminal activity?
  • How do you know you can rely on the information you have?
  • Are you keeping accurate records of escalations and customer interactions?
  • Are senior management aware of the risks (and consequences) associated with your financial crime prevention obligations?

The failings replicate those that we have seen across other regulated sectors and therefore shouldn’t be a surprise. Similarly, the messages from this action should be taken onboard by all regulated institutions, no matter the industry.

Following the announcement, Neil McArthur, Executive Director of the Commission said “We will use the full range of our enforcement powers to make gambling fairer and safer”. It is clear that the Gambling Commission means business and that operators need to make sure their financial crime frameworks’ are robust enough to stand up to the regulator’s scrutiny.

If you need any help in designing, enhancing or reviewing your control framework, please don’t hesitate to get in touch.

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