The UK Gambling Commission has dished out its second-highest ever fine to a licensed operator. Yesterday, the UKGC announced that William Hill has been fined £6.2 million for failing to prevent money laundering and problem gambling.
William Hill will pay £5 million for “breaching regulations” and give up another £1.2 million that the company earned from transactions it should have more thoroughly investigated. All told, that makes this one of the biggest fines ever handed out by the UK Gambling Commission and the biggest fine since 888 was fined £7.8 million for a technical failure that allowed self-restricted customers to access gambling games on 888.
In a press release published yesterday, the UKGC explained that an investigation discovered William Hill accepted millions of pounds’ worth of deposits between November 2014 and August 2016 without verifying the sources of those funds. Over that period, ten customers deposited “large sums of money linked to criminal offences” and William Hill profited around £1.2 million off those deposits.
Gambling Commission executive director Tim Miller told BBC Radio that William Hill missed clear warning signs that could have alerted them to potential trouble:
“In many respects, this wasn’t properly resourced or staffed, so a lot of the checks weren’t happening. People were potentially able to gamble money that was the proceeds of crime; in one case, money stolen from a local council.
“There were clear warning signs, the escalating amount of money that was being spent should have set off alarm bells.”
The UKGC has not offered too much detail regarding the “criminal offences” that were the source of some of those funds, but one example included in the press release noted that one customer was able to deposit £541,000 in funds stolen from his employer.
According to the UKGC investigation, William Hill did speak to that customer at least once and blindly accepted his claim that he earned £365,000 a year without following up on the claim. The truth of the matter is that the customer earns about £30,000 a year.
Another example provided by the UKGC details a customer who exhibited an “escalated gambling spend” that eventually resulted in deposits totaling £100,000. This prompted William Hill to speak with the customer and ask if the customer was comfortable with his spending habits on the platform. The customer assured William Hill that everything was fine. William Hill left it at that and performed no follow-up.
The UKGC said that simply accepting the customer’s word for it was not good enough and that William Hill failed to “sufficiently identify if their behaviour was indicative of problem gambling.”
In the regulatory settlement posted online, the UKGC again alludes to criminal offences as the sources of some of the deposited funds but does not explain beyond providing one example in which a customer stole money from his employer. So far, the UKGC has identified £790,072 in stolen funds that were used to be gambled online. The UKGC may also require an additional £234,000 to be disbursed to victims pending additional investigations.
The total penalty package assessed on William Hill so far is broken down as follows:
- £5 million to be paid to charities for good causes
- £790,072 to be paid to victims of financial fraud
- Potentially an additional £234,000 if further victims are identified
- £21,000 to reimburse the UKGC’s costs in investigating the matter
Lessons for Other Licensed Operators
The UK Gambling Commission has made it clear with this sizable penalty that operators licensed to do business in the UK are responsible for ascertaining the sources of significant deposits. Furthermore, it is not good enough to simply ask a player a few questions and accept his or her answers as fact. If something looks fishy, the operator must follow up on the matter or refuse the customer’s business.
Other operators should take note of these issues and ensure they are fully complying with socially responsible licensing codes and anti-money laundering rules. Operators should also know they are unable to claim plausible deniability when it comes to ensuring their customers are gambling in a safe, healthy and socially-responsible manner.
Operators may not have the same capabilities as law enforcement when it comes to tracking down the sources of funds, but they remain liable all the same. Customers who are making big deposits must be contacted and their stories verified one way or another. The temptation to not ask too many questions should be quelled, because it is clear the UK Gambling Commission does not consider ignorance an excuse.
Finally, operators should be aware that the UK Gambling Commission is looking at much more than just sources of funds. The UKGC has been on a roll lately handing out big fines and warning operators for failing to live up to a myriad of expectations set out for licensees.
The UKGC has been paying special attention to advertising methods in recent months as well. Just a week ago, the Advertising Standards Authority (ASA) notified all operators of even stricter advertising standards beginning in April.
That notice followed up on a warning issued last year by the ASA that operators will be held responsible for ads placed by their affiliates. This notice led several operators to shut down or drastically scale back on their affiliate advertising programs. In all, licensed operators should be prepared to take a conservative approach in all things related to advertising, dealing with customers and promoting healthy gambling.
Wes Burns has more than a decade’s worth of experience as a writer, researcher, and analyst in the legal online betting industry and is co-founder of OnlineBettingSites.com. Wes approaches his work from the viewpoint of players.