Framework(s) used by the Commission’s forensics accounting team
Request
- A copy of the Framework(s) used by the Commission’s forensics accounting team (“Forensics”) when assessing funding arrangements and/or ownership structures (the “Framework”) in the context of applications made under section 69 and 102 of the Gambling Act 2005.
- The Date when the Framework was implemented.
- Unless this is set out in the Framework itself, in what circumstances does the Commission use the Framework in considering applications?
- What criteria or factors are applied or taken into account in deciding to refer to Forensics?
- By whom the decision (to refer to Forensics) can be made (i.e. their position) and at what stage of the application.
Response
Thank you for your request which has been processed under the Freedom of Information Act 2000 (FOIA).
In your email you have requested:
- A copy of the Framework(s) used by the Commission’s forensics accounting team (“Forensics”) when assessing funding arrangements and/or ownership structures (the “Framework”) in the context of applications made under section 69 and 102 of the Gambling Act 2005.
- The Date when the Framework was implemented.
- Unless this is set out in the Framework itself, in what circumstances does the Commission use the Framework in considering applications?
- What criteria or factors are applied or taken into account in deciding to refer to Forensics?
- By whom the decision (to refer to Forensics) can be made (i.e. their position) and at what stage of the application.
For context, the Gambling Commission was set up under the Gambling Act 2005 (the Act) to regulate commercial gambling in Great Britain in partnership with licensing authorities. We also regulate the National Lottery following a merger with the National Lottery Commission in 2013. Section 22 of the Act sets out that the Commission has a statutory duty to promote the licensing objectives as laid out in section 1 of the Act, which are:
- preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime,
- ensuring that gambling is conducted in a fair and open way, and
- protecting children and other vulnerable persons from being harmed or exploited by gambling.
Gambling operators are required to hold a licence from the Commission in order to offer facilities for gambling to customers located in Great Britain. This involves applying to the Commission for an operating licence. During this process, the Commission makes an assessment of suitability against criteria set out in the Act and our published policy documents, including the Statement of principles (Link opens in new tab) for licensing and regulation (June 2017) (the Statement of Principles) and the Licensing compliance and enforcement under the Gambling Act 2005: (Link opens in new tab) Policy statement (June 2022) (the Policy Statement).
Details with regards to how we process a licence application can be found at this link: Operating licences – Gambling Commission. Further information in relation to how the Commission assess operating licence applications is set out at this link:
How we assess operating licence applications - Gambling Commission
Part 5 of the Act details the Commission’s statutory functions in relation to the licensing requirements, and the Policy Statement sets out how the Commission will carry out those functions. Part 3 of the Policy Statement also sets out how the Commission will assess licence applications against a number of criteria:
- Identity and ownership – The identity of the applicant and or person(s) relevant to the application and in the case of an operating licence, who ultimately owns a corporate applicant.
- Finances – Financial and other circumstances of the applicant past and present and/or person(s) relevant to the application. This will include the resources likely to be available to carry out the licensed activities.
- Integrity – The honesty and trustworthiness of the applicant or person(s) relevant to the application.
- Competence – The experience, expertise, qualifications and history of the applicant or person(s) relevant to the application.
- Criminality – Criminal record of the applicant and/or person(s) relevant to the application.
The Commission is currently in the process of finalising the Source of Funds assessment framework, there is no framework for ownership structures. Whilst there is a draft version of this document held by the Commission, it is not officially in effect at this time. As such, there is no implementation date. It should be noted that there is no particular criteria or factors applied when deciding to refer to the Forensic Accounting Team. Each application is dealt with on a case by case basis. Once complete, this Framework will enhance the assessing of licence applications and applicant’s ability to comply with the requirements of the Gambling Act.
We will, as always, share relevant information with applicants and licensees via our website page and e-bulletins about the kind of information we will require. However, the Framework itself is intended to be used as internal guidance. It contains a high level of detail of the techniques used to assess whether a person or entity is fit to hold a licence. Releasing such detail would reveal the methods the Commission uses as part of the assessment process. We are of the view that the disclosure of this information, even in draft form, would prejudice the regulatory functions of the commission. As such, this information is exempt under section 31 of the FOIA.
S31(1) provides that Information which is not exempt information by virtue of section 30 is exempt information if its disclosure under this Act would, or would be likely to, prejudice –
g) the exercise by any public authority of its functions for any of the purposes specified in subsection (2)
The relevant purpose referred to subsection (2) are –
c) the purpose of ascertaining whether circumstances which would justify regulatory action in pursuance of any enactment exist or may arise, d) the purpose of ascertaining a person’s fitness or competence in relation to the management of bodies corporate or in relation to any profession or other activity which he is, or seeks to become, authorised to carry on,
Law Enforcement – Section 31
Public interest test
The factors the Commission has considered when applying the public interest test have been detailed below and our view is that the public interest lies in favour of applying the exemption.
In favour of disclosure
The Commission is a public body which is required to regulate the gambling industry in the public interest. There is therefore a public interest in members of the public having confidence the Commission is being open and honest with the information it holds so that it can be held to account. It is important that the public are assured that the Commission is carrying out its functions in ensuring that any individuals/organisations who are involved in providing gambling facilities to the public have undergone the necessary assessments and will uphold the licencing objectives ensuring that consumers are protected.
Disclosure of the requested information could demonstrate to stakeholders and relevant parties how the Commission is assessing applications and, furthermore, this disclosure may encourage stakeholders to work with us and contribute to our programme of work, increasing confidence in the Commission as a regulator and its ability to uphold the law.
In favour of maintaining the exemption
The Commission has robust and effective processes and procedures in place which are utilised when assessing licence applications. These procedures and processes are put in place to minimise the risk of an operator being granted a licence where they do not meet the required standards. This demonstrates to the public at large that they can have confidence in the Commission’s licence assessment processes.
There is an expectation of confidence in much of the Commission’s work, particularly regarding the techniques used to ascertain if a licence should be granted. It is the impact on this work of the Commission which is more likely to be affected by disclosure. The amount of specific information the Commission can release relating to our regulatory techniques which is directed specifically at its staff who are assessing applications is limited as this could lead to potentially non-compliant operators altering their behaviour specifically to meet the Commission’s standards purely for assessment purposes. Allowing them to tailor their applications in a strategic manner which would deprive the Commission of information which would otherwise have been provided and which would be relevant to the Commission’s assessment of the licence application. This in turn may impact on the Commission’s function of ascertaining a gambling operator’s fitness to carry out gambling activities.
However, in order to promote transparency, there is information that is publicly available, both on our website but also via the Policy Statement (set out above) which clearly sets out the required standards with which operator licensees are expected to comply. Therefore, it is our view that there is sufficient information publicly available about the assessment process and assessment framework to adequately address the public interest in transparency in respect of this matter.
The Commission also publishes other information in relation to how it assesses license applications, including its Statement of principles for licensing and regulation - Gambling Commission. Therefore, to the extent that there is a public interest in transparency around the assessment of license applications this is already met by the material the Commission proactively publishes.
Disclosure of this information would also undermine the Commission's ability to uphold the licensing objectives which would impact on the trust and confidence of the public in it as a regulator.
Further, disclosure of the requested information would prejudice the outcome of future assessments by the Commission by exposing assessment techniques and practices to the detriment of the public interest.
Weighing the balance
The Commission acknowledges that there is a public interest in promoting the accountability and transparency of public authorities and the importance of having sufficient information in the public domain to support consumers with their choice of operator, however, disclosure of the information would be damaging to the Commission as a regulatory body which ultimately serves to protect the wider public interest.
It is important that the public are assured that the Commission is carrying out its functions in ensuring that any individuals/organisations who are involved in providing gambling facilities to the public have undergone the necessary assessments and will uphold the licencing objectives ensuring that consumers are protected.
However, there is a strong public interest in preserving the processes that the Commission uses to assess applications and identify any operators who will be unable to comply with the licensing requirements. The public trust that the Commission has robust processes in place to assess operators so that when they use the services provided by an operator, they are confident that there has been sufficient scrutiny of that operator to ensure that they are protected. If this information were released it would undermine that confidence.
We consider that the public interest is better served by withholding the draft assessment documentation ensuring that consumers are protected through our processes rather than releasing information about our processes which in our view will not benefit the public as a whole.
Review of the decision
If you are unhappy with the service you have received in relation to your Freedom of Information request you are entitled to an internal review of our decision. You should write to FOI Team, Gambling Commission, 4th floor, Victoria Square House, Victoria Square, Birmingham, B2 4BP or by reply to this email.
Please note, internal review requests should be made within 40 working days of the initial response. Requests made outside this timeframe will not be processed.
If you are not content with the outcome of our review, you may then apply directly to the Information Commissioner (ICO) for a decision. Generally, the ICO cannot make a decision unless you have already exhausted the review procedure provided by the Gambling Commission.
The ICO can be contacted at: The Information Commissioner’s Office (opens in a new tab), Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF.
Information Management Team
Gambling Commission
Victoria Square House
Victoria Square
Birmingham B2 4BP