Further guidelines from the Commission regarding Russian sanctions
04 April 2022
The Commission recently published guidelines which highlighted the need for gambling businesses to apply a risk-based approach to the escalating financial sanctions placed on Russian individuals and entities by the UK government. The Commission is providing additional advice due to the continued financial sanctions against Russia and Belarus, and due to the frequent notices issued by the Office of Financial Sanctions Implementation (OFSI). Further information on OFSI updates can be found on the Commission’s Notices and Updates page (which also provides the option to register to receive OFSI alerts from HM Treasury).
As part of gambling businesses’ regulatory responsibilities, they are required to submit mandatory key events (applicable to all operating licences) to the Commission. These matters are to be reported to us online via our eServices digital service. The Commission is reminding gambling businesses of the importance of submitting the following information (amongst other key events where required) to the Commission:
- Licence Condition 15.2.1(10) of the Licence Conditions and Codes of Practice (LCCP): ‘Any investigation by a professional, statutory, regulatory or government body (in whatever jurisdiction) into the licensee’s activities, or the activities of a person in a ‘key position’, where such an investigation could result in the imposition of a sanction or penalty which could reasonably be expected to raise doubts about the licensee’s continued suitability to hold a Gambling Commission licence’
- Licence Condition 15.2.1(15): ‘The making of a disclosure pursuant to section 330, 331, 332 or 338 of the Proceeds of Crime Act 2002 or section 19, 20, 21, 21ZA, 21ZB or 21A of the Terrorism Act 2000 (a suspicious activity report): the licensee should inform the Commission of the unique reference number issued by the United Kingdom Financial Intelligence Unit of the National Crime Agency in respect of each disclosure and for the purposes of this key event the five working day period referred to above runs from the licensee’s receipt of the unique reference number. The licensee should also indicate whether the customer relationship has been discontinued at the time of the submission’
- Ordinary Code Provisions 8.1.1(1) and 8.1.1(2) of the LCCP: ‘…the Commission expects licensees to work with the Commission in an open and cooperative way and to inform the Commission of any matters that the Commission would reasonably need to be aware of in exercising its regulatory functions. These include in particular matters that will have a material impact on the licensee’s business or on the licensee’s ability to conduct licensed activities compliantly and consistently with the licensing objectives.
‘Thus, licensees should notify the Commission, or ensure that the Commission is notified, as soon as reasonably practicable and in such form and manner as the Commission may from time to time specify if any matters which in their view could have a material impact on their business or affect compliance’.
Taking into account the above information relating to reporting financial sanctions breaches or potential financial sanctions breaches, gambling businesses should be asking themselves the following:
Do you think you have breached the UK’s financial sanctions regime?
Yes
If yes:
- report any financial sanctions breaches to OFSI
- gambling businesses should also consider whether reporting to the UK Financial Intelligence Unit (UKFIU) is appropriate in the circumstances (in addition to any required reporting to the OFSI).
In such circumstances, businesses should be considering whether (as a result of the financial sanctions breach) to request a Defence Against Money Laundering (DAML) or Defence against Terrorist Financing (DATF) from the UKFIU following the suspicious activity report (SAR) process, if there is knowledge or suspicion of money laundering or terrorist financing, as required under the Proceeds of Crime Act 2002 (POCA) (opens in a new tab) and the Terrorism Act 2000 (TACT) (opens in a new tab). Any DAML OR DATF must always be in relation to carrying out a “prohibited act” under POCA or TACT.
Following the submission of any SAR to the UKFIU, report such a submission to the Commission under Licence Condition 15.2.1(15) of the LCCP providing the SAR’s unique reference number (in five working days).
No
If no:
- businesses should have systems in place to prevent sanctions breaches and to monitor and review this risk area closely (including reviewing and updating money laundering and terrorist financing risk assessments if required)
- businesses have a general obligation to inform the Commission of any matters that will have a material impact on their business or their ability to conduct licensed activities compliantly and consistently with the licensing objectives under Ordinary Code Provisions 8.1.1 of the LCCP.
Are you being investigated for a potential sanctions breach?
Yes
If yes:
- report this to the Commission under Licence Condition 15.2.1(10) of the LCCP (in five working days).
No
If no:
- businesses should have systems in place to prevent sanctions breaches and to monitor and review this risk area closely (including reviewing and updating money laundering and terrorist financing risk assessments if required)
- businesses have a general obligation to inform the Commission of any matters that will have a material impact on their business or their ability to conduct licensed activities compliantly and consistently with the licensing objectives under Ordinary Code Provisions 8.1.1 of the LCCP.