Changes to information requirements in the LCCP, regulatory returns, official statistics, and related matters
- Changes to information requirements in the LCCP, regulatory returns, official statistics, and related matters
- Executive Summary
- Part 1: Summary of responses - Changes to information requirements for licensees: Consultation Response
- Part 2: Summary of responses - Changes to information requirements for licensees: Consultation Response
- Annex - Summary of changes to licence conditions and codes of practice
Proposal 11: Changes to licence condition 15.2.2 (other reportable events)
We proposed to update licence condition 15.2.2, which details other reportable events which must be reported to us. Specifically, we proposed to:
- remove existing licence conditions 15.2.2 (1a) and (1b), which concern the conclusion of disputes referred to an Alternative Dispute Resolution (ADR) entity and reporting of outcomes adverse to the licensee
- incorporate some of the requirements of ordinary code provision 8.1.1. Specifically, the need to inform us of any material change in the licensee’s structure or the operation of its business, and any material change in managerial responsibilities or governance arrangements
- undertake minor amendments to licence condition 15.2.2 (1c) to provide clarity on the definition of the 3 percent or 10 percent threshold contained within the condition
- incorporate key event 15.2.1 (15) - changes to customer funds arrangements, and 15.2.1 (16) - change in identity of the ADR entity or entities used by a licensee for the handling of customer disputes; both reassigned from Licence condition 15.2.1
- amend the footnote for licence condition 15.2.2, to reinforce that other reportable events submissions are to be made online via our eServices’ portal. This will enable us to capture and process other reportable events faster and more efficiently.
We also proposed to introduce a new requirement to enable us to better manage money laundering and terrorist financing risks to keep crime out of gambling, and to encourage self-reporting by licensees. Licence condition 15.2.2 (1d) will require the reporting of actual or potential breaches by the licensee of the requirements imposed by or under:
- Parts 7 or 8 of the Proceeds of Crime Act 2002
- Part III of the Terrorism Act 2000
- any United Kingdom (UK) law by which those statutes are amended or superseded.
Question 1.11. Do you agree with the proposed changes to the licence condition?
Overall respondents supported the removal of two key events (licence conditions 15.2.2 (1a) and (1b) (current) from the existing Licence Conditions and Codes of Practice (LCCP) and the redefinition of two key events into this section as ‘other reportable events’ (licence conditions 15.2.1 (15) and (26)) (to become 15.2.2 (1a) and (1b) (new)).
On the proposed elevation of two ordinary code reporting requirements into this section, one licensee stated that they already routinely reported material changes to business operations and governance arrangements. Other licensees supported this if detailed guidance was published to define 'material impact' and 'material change'. However, a number of respondents queried the elevation of reporting to us of events 'which could have a material impact on a licensee’s business or on the licensee’s ability to conduct licensed activities compliantly and consistently with the licensing objectives' from ordinary code 8.1.1 to licence condition 15.2.2 (1). They suggested that the term 'material impact' was broad and open to inconsistent interpretation and could lead to excessive reporting of non-important issues. Some respondents commented that our list of key events should sufficiently cover those events which we required to be made aware of and therefore that this element of the LCCP should be retained in ordinary code 8.1.1.
Changes to licence condition 15.2.2 (1c) were supported in principle, but there were several comments that the proposed wording needed to be clearer. There was a suggestion that the event should be separated into two parts; such that it was clear that one part related to non-licensees advertising remote gambling services in a new jurisdiction and the other related to non-licensees generating 3 percent or 10 percent of group Gross Gambling Yield (GGY). In addition, respondents sought clarification on:
- whether the 3 percent and 10 percent related to all non-Gambling Commission licensees within a company group, or an individual non-licensed company within the group; or whether the figures relate to GGY or revenue specifically within the new jurisdiction that an entity within the company group is advertising remote gambling facilities
- the need to report this information
- whether licensees were required to report fluctuations outside the thresholds on a recurrent basis (for example if the GGY of a non-Commission licensed company was generating more than 3 percent of group company one month, then did not the next month, then did the month after).
One respondent suggested that licence condition 15.2.2 (15) - changes to customer funds arrangements, to be moved into this section - should only require 'material' changes in customer funds arrangements to be reported to us.
On the addition of licence condition 15.2.2 (1d), on the need to report 'potential breaches' under the new Proceeds of Crime Act (POCA) and Terrorism Act, some respondents considered this reporting requirement too broad. One respondent commented that licensees were already required to report criminal investigations under licence condition 15.2.1 (19b) and therefore this requirement was unnecessary. Other queries included:
- whether the requirement could put licensees at risk of breaching s.333 or s.342 of the POCA
- whether the submission of Suspicious Activity Reports (SAR) was the criteria to notify these matters to us, or whether our proposal extended beyond this
- whether it was in fact the role of the relevant prosecuting authorities and ultimately the courts to determine whether a breach of the law contained within these legislative acts
- clarification on the process we would following to interpret and adjudicate whether breaches had occurred.
On the proposed footnote change requiring other reportable events to be submitted to us via our eServices system, several respondents requested the addition of sub-categories aligned to these events and an ‘other’ category to capture any other events licensees may choose to report.
We note the feedback in relation ordinary code provision 8.1.1 and have decided not to proceed with the proposals to elevate elements of the code into licence condition 15.2.2 at this stage. Ordinary code provision 8.1.1 will be retained in its current form.
For the other reportable event relating to changes in arrangements for the protection of customer funds (licence condition 15.2.1 (15), transferred from being a key event to become licence condition 15.2.2 (1a)) we will add the word material (as in material changes) and review whether further guidance would be appropriate.
We suggested minor amendments to licence condition 15.2.2 (1c) to provide clarity on the definition of the 3 percent and 10 percent threshold contained within that condition. We have taken on board comments raised that the current and proposed requirement need further clarification. Therefore, we will be changing the new requirement to state that thresholds will relate to group Gross Gambling Yield (GGY) only, rather than a combination of GGY and revenue. This is to align with our use of GGY for other financial figures we require. We are also adding that the threshold applies to new jurisdictions. We will continue to keep the event as one entry to avoid further confusion and judge that it sufficiently explains that it applies to all non-Gambling Commission licensees. Any additional clarification, such as why we require this information will be found within additional guidance to be published.
We have considered the comments of respondents on our proposal to introduce licence condition 15.2.2 (1d) and must re-emphasise that the primary purpose of this reportable event is to encourage self-reporting by licensees of breaches by the licensees of the relevant provisions of the Proceeds of Crime Act (POCA) or the Terrorism Act. We do not agree that the requirement is too broad as it covers actual or potential breaches of Parts 7 or 8 of POCA or Part III of the Terrorism Act by the licensee. The only relevant provisions therefore are the reporting requirements in relation to known or suspected money laundering or terrorist financing activity, breaches of the tipping-off or prejudicing an investigation requirements, or committing one or more of the principle money laundering or terrorist financing offences. It does not extend to breaches of POCA or the Terrorism Act by customers of the licensee.
We also do not agree that it would put licensees at risk of breaching section 333 or 342 of POCA. In the first instance, we assume that respondents are, in fact, referring to section 333A of POCA. This section provides that a person in the regulated sector (casino licensees in the context of gambling) commits an offence if they disclose to another person that they have submitted a Suspicious Activity Report (SAR) to the National Crime Agency, that disclosure is likely to prejudice any investigation that might be conducted following submission of the SAR, and the information came to the person in the course of business of the licensee. Likewise, section 342 provides that a person commits an offence where the person knows or suspects that an appropriate officer is acting in connection with a confiscation investigation, a civil recovery investigation, a detained cash investigation or a money laundering investigation, makes a disclosure which is likely to prejudice that investigation, and falsifies, conceals, destroys or disposes of documents which are relevant to the investigation. However, a person does not falsify, conceal or destroy such documents if they do not know or suspect that they are relevant to the investigation and does not intend to conceal any facts disclosed by the documents from any appropriate officer. Notification to us of breaches of the provisions listed in the previous paragraph does not constitute offences under these sections of POCA. In fact, licensees would be required to notify us where they breach these provisions.
The submission of SARs is not the appropriate criteria to notify us of these matters. The reporting requirement is in relation to breaches of the relevant provisions of POCA or the Terrorism Act by the licensee. It is not concerned with the reporting by the licensee of known or suspected money laundering or terrorist financing activity involving their customers.
We agree that it is for the courts to decide whether a breach has occurred, and we do not intend to adjudicate in place of this. We do expect a licensee to be capable of identifying whether a breach has or potentially has occurred, and this should be reported to us as it may have an impact on the continued suitability of an operator to hold a licence. The reportable event is a simple process of notifying the Commission of either proven or potential breaches. We encourage self-reporting by licensees which allows us to better manage potential money laundering and terrorist financing risks, and thus keep crime out of gambling.
We will ensure that the submission headings on the eServices digital portal are aligned to the events listed in ‘other reportable events’ and that an ‘other’ category is included for events which need to be reported to us, but which we haven’t defined. We will use the wording 'are to be reported' to us online via the eServices digital service, instead of 'must be reported', as this allows for exceptions to be made for accessibility reasons.
The following changes will take effect from 31 October 2020.
Final wording of amended licence condition 15.2.2 (other reportable events)
Licence condition 15.2.2
Other reportable events
All operating licences
1 Licensees must also notify the Commission in such form or manner as the Commission may from time to time specify, or ensure that the Commission is so notified, as soon as reasonably practicable of the occurrence of any of the following events1:
- a. any material change in the licensee’s arrangements for the protection of customer funds in accordance with the licence condition 4 (protection of customer funds) (where applicable).
- b. any change in the identity of the ADR entity or entities for the handling of customer disputes, as required by the social responsibility code provision on complaints and disputes.
- c. their becoming aware that a group company which is not a Commission licensee is advertising remote gambling facilities to those residing in a jurisdiction in or to which it has not previously advertised or their becoming aware of a sustained or meaningful generation of the 3 percent or 10 percent of group Gross Gambling Yield threshold being exceeded by the group in that jurisdiction.
- d. any actual or potential breaches by the licensee of the requirements imposed by or under Parts 7 or 8 of the Proceeds of Crime Act 2002, or Part III of the Terrorism Act 2000, or any UK law by which those statutes are amended or superseded.
In this condition:
- a. 'group company’ has the same meaning as in condition 15.2.1; and
- b. without prejudice to section 327 of the Gambling Act 2005, ‘advertising’ includes: having a home page directed towards a jurisdiction and written in, or in one of, that jurisdiction’s official language(s), having arrangements enabling that jurisdiction’s currency to be selected for gambling or the use of payment methods available only in that jurisdiction, and providing a specific customer service facility referable to that jurisdiction.
1 Other reportable events are to be reported to us online via the ‘eServices' digital service on our website.
Proposal 10: Changes to licence condition 15.2.1 (reporting key events – gambling facilities) Next section
Proposal 12: Additional licence condition 15.2.3 (Other reportable events)
Last updated: 16 March 2023
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