UK Casino Money-Laundering Concerns

Allegations regarding money laundering activities have led to the issuance of letters from the UK Gambling Commission to 17 online casino operators. The letters specify the allegations and warn the operators that the Commission will revoke their licenses if action is not forthcoming to prevent money laundering through their sites.

The warnings, which could potentially impact similar land-based Vegas casino UK sites, details the consequences that the casinos could face if they don't improve their anti-money laundering measures. The Gambling Commission acknowledged that the casinos were making efforts to stem the practice but their current policies aren't enough. The Commission called into notice the “serious nature” of its findings which also focus on problem gambling.

Five of the firms are on particular notice, based on the Commission's early findings, and the other twelve are being notified of the ongoing investigations. Consequences could result in permission for these casino sites to operate in the UK to be revoked.  

Sarah Harrison, the regulator’s chief executive, said “It is vital that the gambling industry takes its duty to protect consumers and keep crime out of gambling seriously. The Gambling Commission’s new strategy sets out our vision for a fairer and safer gambling market. The action we are taking to examine online casino operators’ compliance with money laundering and customer interaction requirements is just one example of how we will be relentless in turning that vision into reality.” 

Money Laundering

Money laundering has always been a concern for governments who want to track from where funds are coming and to where they're going. It's of special concern today because so much of laundered money is making its way into the hands of terrorists who thrive on the easy financing to launch their attacks.

Money laundering involves concealing the transformation of profits from illegal activities into seemingly "legitimate" assets. Operators of illegal concerns need to find ways to account for the origin of their profits so that they don't raise the suspicion of law enforcement agencies.

Strategies which enable the safe use of those proceeds for further accumulation of wealth, acquisition of properties and financing terror activities and other illegal acts is termed "money laundering.  Casinos are often viewed as the perfect set-up to launder money because they involve transfers of vast amounts of cash by gamers. Many governments are now cooperating  in international arrangements to assist each other in tracking down these money laundering schemes.

UK Efforts

The UK Gambling Commission faults the online casinos for not doing enough to prevent money laundering and for not using a percentage of its profits in its societal responsibility to address problem gambling.

One area of particular concern involves the hiring of "money laundering reporting officials" who have no formal qualifications. The commission wrote that these "officials" were  “unable to provide suitable explanations as to what constitutes money laundering" and showed a  “general lack of understanding of how criminal spend could affect the business.” 

Many of the operators are not submitting enough information about suspicious activity to the National Crime Agency and other law enforcement agencies. 

Regarding the casino operators' failure to address problem gambling, the commission noted that the online casinos were not taking appropriate steps to intervene when a player was showing signs of compulsive gambling activity. In the report, the commission wrote that it had identified customers who showed signs of problem gambling, but that no "customer interaction” intervention was taken by the casino. 

Conclusions

The report warned that all 17 letter recipients were obligated to improve the measures that they took to prevent money laundering and protect customers. Five of the 17 operators are also in danger of having their licenses immediately withdrawn. Labour’s deputy leader, Tom Watson, who has been involved in a review of his party's gambling policy, commented, saying that “This serious warning shows many online gambling companies acting as if money laundering and gambling addiction being facilitated on their platforms aren’t their problem. The Gambling Commission is right to demand immediate improvement. No firm that fails to take its responsibilities seriously should be allowed to hold a licence.

The Remote Gambling Association further noted that many of the online casino sites had been unable to spot signs of financial crime and compulsive gambling. But the regulator reviewed a large number of customer accounts. They found "potential signs of problem gambling based on consumers' gambling pattern and spend" yet "In many cases, however, this behaviour did not trigger a customer interaction." The Commission's report recommended that the operators train their staff members in the law so that the staffers can monitor and risk profile customers.

Regarding money laundering, the commission said that staff at the casinos seemed to have little or no idea of how to spot money laundering. Many didn't seem to know what money laundering involved. The commission said that companies should make sure that their staff is trained in the law. Customers should be monitored and profiled for risk, it said.

Online Gambling in the UK

The online market accounts for a third of the UK gambling industry. The UK body that represents online casinos, the Remote Gambling Association,  responded, saying “Keeping crime out of gambling is one of the three licensing objectives and if the commission has identified failings in this area then it must take action. It would be wrong to prejudge the outcome of their investigations, but we would obviously want to work with them to raise standards wherever necessary.”

Sarah Harrison, chief executive of the Gambling Commission, said the organisation was taking action to make the market "fairer and safer…….it is vital that the gambling industry takes its duty to protect consumers and keep crime out of gambling."

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