Kindred subsidiary settles with GC over AML and SR failings

13 June 2019

Kindred Group subsidiary Platinum Gaming has agreed a £1.6m (€1.8m/$2.0m) settlement with the GB Gambling Commission after it was ruled to have failed to prevent gambling harm and breached UK money laundering regulations.

The decision follows an investigation by the regulator, during which it identified breaches of various regulations, including Social Responsibility Code Provision 3.4.1. of the 2005 Gambling Act and the 2017 Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

The Commission initiated the investigation after it was passed information about an individual who had been convicted of a £2m fraud and had been spending stolen money through a number of gambling operators, including PGL.

The customer opened a gambling account with PGL and made a series of large deposits, losing significant sums in a very short period of time. In total, the individual lost £629,420.

In its evaluation, the regulator said the customer high deposits with significant losses were a sign of gambling-related harm, and PGL should have considered refusing to serve the customer or barring access from their gaming sites. The individual opened a standard account on February 24, 2017 and was made a VIP customer two days later.

Although the customer stopped gambling with PGL in March 2017, he resumed his activity in October 2017, gambling and losing ten times the amount he had gambled previously.

The Commission said that PGL failed to make use of all available information they held on the customer to ensure effective decision making, adding that this was particularly concerning given the player was identified as a high-value player.

The regulatory investigation also found PGL in breach of licence condition 12.1.2, which relates to anti-money laundering and due diligence processes.

PGL, according to the Commission, failed to comply with measures 7(1) and (3) of the 2017 Regulations as it did not make adequate enquiries about the source of the funds the customer used to gamble, despite flagging them as a high-risk player.

The regulator also said PGL failed to apply enhanced due diligence and ongoing monitoring properly on a risk-sensitive basis. This went contrary to section 14 of the 2017 Regulations, which requires operators to apply additional measures to establish and verify the customer’s identity, as well as scrutinise transactions that present a higher risk of money laundering.

The investigation discovered when the customer returned to PGL after a five-month absence, they were able to recommence gambling without any further verification, despite having previously been flagged as high-risk.

The regulator said the fact player was able to return in October 2017 and deposit and lose such significant amounts of money shows PGL’s policies and procedures “were not fit for purpose”.

According to the Commission, PGL acknowledged its shortcomings at an early stage of the process. The oeprator accepted it failed to act in accordance with the Licence Conditions and Codes of Practice, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and regulatory guidance on both money laundering and terrorist financing.

The £1.6m settlement includes PGL divesting itself of £629,420 generated from the customer's gambling, with this money returned to individual from whom it was originally stolen.

Also covered is a £990,200 payment in lieu of a financial penalty, which will now be used to help fund the National Strategy to Reduce Gambling Harms, as well as a payment of £9,800 towards the Commission’s investigative costs.

“There were weaknesses in Platinum Gaming’s systems and as a consequence, more than half a million pounds of stolen money flowed through the business," Gambling Commission executive director Richard Watson said. "This is not acceptable and I would urge all operators to carefully read this case and learn lessons so they don’t make the same mistakes.”

“This is yet another example of us taking firm action against online operators who fail to protect consumers or implement effective safeguards against money laundering.

“We must see the industry stepping up and providing consumers in Great Britain with the safest and fairest gambling market in the world," Watson added. "Where we continue to see failings, we will continue to take action.”

PGL is the second gambling operator to reach a settlement with the Commission over regulatory failing this week, after it was announced yesterday (June 12) that software developer and operator Gamesys Group settled for £1.2m over failing to prevent gambling harm and breaching money laundering regulations.

Last week, the Commission also stripped Malta-licensed operator MaxEnt Limited, trading as Maxent NRR Entertainment, of its UK operating licence following a change in ownership. The Slotty Vegas operator has since stated that it intends to appeal the decision.