From 12 September 2022 the UK Gambling Commission is enforcing tougher rules on social responsibility following failings of online casinos and bookmakers to adequately protect vulnerable customers, including people with gambling addictions. Where previously it has left firms to decide how to protect these consumers, the new rules set out the Commission's expectations regarding identification of vulnerable people, monitoring indicators of harm, using automated systems and processes, and evaluating the impact of customer interactions.
The new guidance is detailed in provision 3.4.3 of the Gambling Commission's Licence Conditions and Codes of Practice.
Failure to follow the new guidance will result in enforcement action being taken. In May 2022, Gambling Commission Chair Marcus Boyle outlined the intention to ramp up enforcement work and the penalties that would come with it. He wrote in The Times that the Commission could no longer tolerate “an attitude of lowest-possible compliance being sufficient” and will be introducing “a suite of sanctions aimed at changing behaviour.”
In August alone, the Commission delivered several enforcements and penalties for social responsibility and anti-money laundering failings, totalling £20 million.
As part of enforcement, firms are increasingly required to undertake third-party audits to examine whether anti-money laundering and social responsibility policies, procedures and controls have been implemented in accordance with regulatory requirements.
Following a minimum standard of compliance, failure to proactively identify breaches and timely inaction will not be accepted. As the Gambling Commission's CEO Andrew Rhodes announced in April 2022: "We expect operators to identify and tackle gambling harms with fast, proportionate and effective action, and we will not hesitate to take tough action on operators who fail to do so."
In exercising its powers to impose financial penalties, the Gambling Commission will look at:
Further detail can be found in the Statement of principles for determining financial penalties.
Knowledge-sharing and keeping up to speed with the changing regulatory environment is essential. This includes sharing best practice examples among firms in safe environments and closely following enforcement decisions and good practice guidelines issued by the Gambling Commission.
From recent enforcements, we can see where common poor practices lie in social responsibility and anti-money laundering – and where firms need to focus in order to meet the new standards.
Such as not sufficiently recording and evaluating customer interactions, and not interacting (or being too slow to interact) with customers exhibiting signs of potential harm associated with gambling.
This includes failure by front-line staff to escalate potential concerns with customers for safer gambling reviews.
Firms failing to take into account Commission guidance on customer interaction when building and operating their social responsibility framework.
1 Poor implementation and documentation
Failure to adequately implement policies and clearly document what's expected as part of source-of-funds checks.
Inappropriate controls allowing significant levels of gambling spend to take place within a short space of time without sufficient knowledge of the customer's financial situation, including:
Inadequate risk assessments of online business being used for money laundering and terrorist financing.
Inadequate financial trigger thresholds for anti-money laundering reviews.
The Gambling Commission has set out the following good practice questions which firms need to consider when appraising their social responsibility and anti-money laundering framework.
Establishing a robust combined social responsibility and anti-money laundering framework will be key to maintaining a sustainable business that protects vulnerable customers and prevents money laundering. Firms that proactively assess their compliance frameworks, follow best practice and comply with regulators will be able to avoid future reprimand and fines by the Gambling Commission.
For further insight and guidance on social responsibility and anti-money laundering, get in touch with Andrés Galiñanes.