The severe penalties imposed by the UK Gambling Commission (the "Commission") on online gambling business Triplebet, serve as a stark reminder to directors on the importance of keeping your AML policies and procedures up-to-date and implementing them correctly. This article examines the reasons published by the Commission for suspending the license of Triplebet, who operate 'Matchbook' betting exchange and remote casino. This suspension is due to serious anti-money laundering (AML) and social responsibility failings over the last three years.
The Commission have taken this very seriously. They have imposed a fine of £740,000 and have suspended the licence until Triplebet can prove it has implemented the remedial measures required by the Commission.
This case confirms that betting companies need to ensure they keep their AML policies and procedures up to date and that all relevant staff are trained to ensure procedures are adhered to.
The argument that professional gamblers are low risk to money laundering will not hold water with the Commission. Documentary evidence must be obtained in line with the guidelines regardless. Procedures must be implemented and maintained, even where no money laundering has occurred. Claiming that the Commission's guidance is unclear is unlikely to get far either. As Triplebet had, in any case, failed to seek appropriate professional advice as to its obligations prior to June 2019.
Below is a more detailed look into the Commission's findings in relation to AML failures.
Triplebet's licence and the Money Laundering Regulations 2017 require operators to establish and maintain policies to effectively manage the risks of money laundering and terrorist financing. They failed to:
- set out the objective circumstances which would trigger a risk reclassification for customers;
- set out the specific enhanced due diligence (EDD) measures which would be implemented for particular categories of high risk customer;
- provide guidelines for when source of funds and/or source of wealth investigations should be undertaken; and
- adequately record customer interactions and monitoring.
Triplebet failed to update its AML policy between November 2014 and October 2017. Also its policies, procedures and controls were not implemented effectively. Interestingly, although the company claimed that it relied on its staff to implement the procedures , it was found to have failed to give its staff sufficient guidance on implementation or to monitor or manage them sufficiently.
Monitoring business relationships
Triplebet's licence and the Money Laundering Regulations 2017 required ongoing monitoring of business relationships, including, where necessary, the customers' source of funds.
The Commission found that Triplebet did not place enough emphasis on addressing AML risks. Any monitoring they did carry out was not recorded sufficiently. Customers were being allowed to gamble huge sums without any checks of their source of funds, for example:
"In one case, a customer put at risk over £2 million in a single day without any source of funds or source of wealth being required".
Triplebet did not conduct detailed checks on professional gamblers. Their rationale being that they are a known low-risk category for money laundering. It's worth noting that this was rejected by the Commission as their view was that money laundering includes the simple use of criminal funds to fund gambling as a leisure activity, and criminals may also be habitual gamblers.
Account to account transactions
Triplebet had permitted one customer to move money to another customer or account (or even another account in his/her name, including abroad) without the kind of controls which would be typical of banking transactions for similar amounts and creating an appearance of legitimate monies to be withdrawn or spent.
Prior to October 2017, such transactions were not documented at all by Triplebet. Even after October 2017 the reason for the transaction was not recorded in the transfer request documents. These transfers would even occur where the customers would only gamble very little or not at all.
Following the intervention of the Commission, Triplebet ceased to permit account to account transactions for its UK customers in May 2018. It took them until January 2019 to ban such transactions for non-UK customers.
One of Triplebet's main customers was a syndicate, whose lead contributor was a professional gambler. This professional also held a beneficial interest in Triplebet itself. This syndicate matched bets on the betting exchange over an 18-month period from November 2016 totalling in excess of $55 million, without any documented risk assessment.
Triplebet claimed that as a customer, there was no obligation upon it to ascertain the identities of the lead contributor of the syndicate or of the other contributors or consider their source of funds or wealth. However, the Commission found that the consequence was that gamblers had been permitted to gamble very large sums without due diligence.