A Gambling Commission review into Aspers Stratford City Casino (“Aspers Stratford”) has found player protection and anti-money laundering failures.
In December 2018, the Commission commenced a review of Aspers Stratford’s operating licence upon becoming aware of the circumstances of an individual who tragically died by suicide after visiting the London casino.
The Commission’s review looked at compliance with regulatory requirements, identified weaknesses in the way that Aspers Stratford managed its anti-money laundering, social responsibility and customer interaction policies and processes which allowed the individual to make several unchecked cash purchases.
In line with the regulatory framework, the Commission has taken the following actions:
- A warning has been issued to Aspers Stratford for breaches relating to anti-money laundering processes, failing to comply with customer interaction rules and breaching cash desk policy rules
- Aspers Stratford to undertake a follow-up independent audit of its policies and procedures within six months to ensure improvements are effective, with the further implementation of further recommendations if required, and:
- A financial penalty of £652,500.00 has been imposed. Aspers Stratford will also divest itself of the gross gambling yield to the sum of £78,233.00 which it accumulated as a result of its failings.
Following an internal report, Aspers Stratford has since made a variety of changes to its anti-money laundering, social responsibility and customer interaction policies.
Neil McArthur, the Commission’s Chief Executive said: “This was a tragic case and our thoughts remain with family.
“The circumstances of the death were investigated by both the police and the coroner. As the regulator, we examined the casino’s management of the individual and found failings around the company’s anti-money laundering, social responsibility and customer interaction procedures.
“We will be watching their future conduct closely and this case highlights why all operators must not only have clear policies in place, but that they are up to date and implemented by staff who have the correct training to spot signs of gambling harm or unusual patterns of play.”
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Public statement (270121)
Aspers (Stratford City) Limited
Type of Licence: Combined Operating Licence (Non – Remote) Licence Number: 026947-N-310097
In the early hours of 12 November 2018 X tragically died by suicide. An investigation into the circumstances of X’s death was carried out by the Police. An inquest hearing took place at which the Gambling Commission (“the Commission”), the police, Aspers (Stratford City) Limited (“Aspers”) and the family provided evidence. The Coroner determined X had died by suicide.
X was a VIP customer of Aspers and had last visited the casino in Stratford, London on the 11 November 2018.
The Commission immediately engaged with Aspers to establish its management of X as a customer. In December 2018, Aspers supplied the Commission with a report (“Internal Report”) of an investigation conducted by it into its commercial relationship and personal interactions with X and the adequacy of its policies and procedures. The Internal Report highlighted regulatory failings in X’s case and related problems with Aspers policies and practices more generally.
The Commission commenced a regulatory investigation, in December 2018, to determine whether Aspers had complied with its regulatory requirements relating to its management of X as a customer and its management of risk to the Licensing Objectives, namely preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime; protecting children and other vulnerable persons from being harmed or exploited by gambling.
The Commission started a review of Aspers operating licence (September 2019). The review identified that Aspers had breached conditions of its operating licence relating to AML, social responsibility (compliance with a SRCP is a condition of the licence by virtue of section 82(1) of the Act.) and the cash and cash equivalents (paragraphs 2 and 3 of licence condition 12.1.1 (anti-money laundering, prevention of money laundering and terrorist financing, paragraph 1 of social responsibility code provision 3.4.1 (customer interaction) and paragraphs 1 and 2 of licence condition 5.1.1 (cash and cash equivalents)).
Aspers also failed to take into account ordinary code provision 2.1.1, which sets out that in order to help prevent activities related to money laundering and terrorist financing, licensees should act in accordance with the Commission’s guidance on anti- money laundering (“AML”), The Prevention of Money Laundering and Combating the Financing of Terrorism - Guidance for remote and non-remote casinos. http://www.gamblingcommission.gov.uk/PDF/AML/Prevention-of-Money-Laundering- and-Combating-the-Financing-of-Terrorism-5th-Edition.pdf
The Commission identified the following failings:
Licence Condition 12.1.1 requires licensees to have in place appropriate policies, procedures and controls to prevent money laundering and terrorist financing, following and having regard to the risk assessment. It also requires it to review such policies and revise them as appropriate.
The Commission found weaknesses in Aspers policies, procedures, and controls to prevent money laundering. In relation to AML, the Commission found Aspers policies, procedures, and controls:
- could have been better in some important respects.
- could have been implemented more effectively, and there were weaknesses and shortcomings in relation to the putting into effect of its policies and procedures,
- were not adhered to in respect of X. For example:
- If they had been followed, X would not have been allowed to gamble without providing the enhanced due diligence (“EDD”) information which had been requested,
- Aspers failed to effectively monitor X as a customer and keep a record.
- There was a risk of AML failures having occurred in relation to some customers other than X, although the Aspers believes the scale of the failures in relation to X were exceptional.
Social responsibility code provision 3.4.1 requires licensees to put into effect policies and procedures for customer interaction where they had concerns that a customer’s behaviour may indicate problem gambling, with specific provision for those designated as high value or VIP customers.
The Commission’s review identified weaknesses in Aspers social responsibility (SR) policies and procedures. The Commission found:
- Aspers policies, procedures and controls relating to SR could have been better
- A number of SR interactions required by Aspers policies and procedures were not always implemented effectively and there was not always sufficient review and oversight of the quality of SR interactions with customers, particularly when those interactions were cumulative in nature. Aspers considers insufficient resourcing may have been a contributory factor; and
- During his period of custom with Aspers responsible gambling interactions with X, as a VIP customer, did not always take place or were inadequate/not meaningful. There was a misguided assumption that X could afford the level of losses. There were failures in record keeping.
- there was a risk of SR failures having occurred in relation to some customers other than X, although Aspers believes the scale of the failures in relation to X were exceptional.
Cash and cash equivalents
Licence condition 5.1.1 requires licensees to implement appropriate policies and procedures concerning the usage of cash and cash equivalents by customers. It also requires to ensure that such policies and procedures are implemented effectively, kept under review, and revised appropriately to ensure that they remain effective, and take into account any applicable learning or guidelines published by the Gambling Commission.
The Commission’s review identified weaknesses in the Aspers policies and procedures in relation to cash and cash equivalents in the following respects:
- it did not make any enquiries of X in relation to cash purchases of £46,920 and £51,000 on 2 and 3 September 2017 respectively placing too much reliance on X’s previous winnings,
- it failed effectively to implement its own policies, procedures and controls in relation to X’s gambling, allowing him to make cash purchases of £5,190, £5,660 and £6,100, in excess of the £5,000 limit in clause 5.4.1 of its AML policy, on 3 September, 5 September and 11 November 2018 respectively; and
- X’s cash purchases on 5 September and 11 November 2018 exceeded the £5,000 limit by virtue of his play on electronic roulette, highlighting the fundamental weakness in the Aspers’ loose cash policy, i.e. that it only applied to table games. The policy has since been extended to all forms of gambling at the casino, including electronic roulette and poker.
Action taken by Aspers
Following the tragic event of 12 November 2018, Aspers UK Holdings Limited (“Aspers Group”) launched an urgent internal investigation with a view to identifying and implementing any necessary improvements to policies and procedures.
The Internal Report, commenced in November 2018, made extensive findings and recommendations in relation to Responsible Gambling and AML, Security and Surveillance and the Responsible Service of Alcohol. It identified clear lessons to be learned to develop and improve Aspers’ policies and procedures.
The Commission recognises that Aspers has sought to rectify the failings identified during the review and implement all of the recommendations made by the Internal Report in relation to its policies and procedures.
The Commission exercised its powers under section 117(1) of the Act as set out below:
A warning under section 117(1)(a) of the Act in respect of the following findings:
(a) breach of paragraphs 2 & 3 of licence condition 12.1.1 (prevention of money laundering and terrorist financing);
(b) breach of paragraphs 1 & 2 of licence condition 5.1.1 (cash and cash equivalents);
(c) failed to comply with SRCP 3.4.1 (customer interaction); and
(d) failing to take into account OCP 2.1.1 (anti-money laundering – casino).
A financial penalty, under section 121(1) of the Act, in the sum of £1,800,000, for:
(a) breach of paragraphs 2 & 3 of licence condition 12.1.1 (prevention of money laundering and terrorist financing);
(b) breach of paragraphs 1 & 2 of licence condition 5.1.1 (cash and cash equivalents); and
(c) failed to comply breach of SRCP 3.4.1 (customer interaction)
The level of the financial penalty was reduced to £652,500.00 following representations and evidence received from Aspers regarding its financial circumstances, particularly in light of Covid-19 pandemic and measures. The Commission has a statutory obligation to take into account any representations received before financial penalty is imposed.
In addition, Aspers agreed to divest itself of the gross gambling yield (“GGY”) in the sum of £78,233.00 which it had accumulated as a result of its failings in relation to X and another customer.
The Commission also determined that Aspers should undertake a follow-up independent audit of relevant policies and procedures within six months to ensure the improvements recommended by the Asper Groups Internal Report have been made and are effective, and that any further recommendations made by the independent audit should be implemented thereafter.
We consider this case provides valuable learning for licensees. You should take account of the failings identified in this case in planning and reviewing your own AML SR measures.
Licensees should consider the following questions:
- Have you ensured you have a clear, up-to-date, and fit for purpose Responsible Gambling Policy which takes into account the Commission’s guidance and includes a customer’s affordability?
- Do you have procedures and systems in place to identify customers who may be experiencing or at risk of developing problems with their gambling? the Commission’s guidance can be found here: http://www.gamblingcommission.gov.uk/PDF/Customer-Interaction-Formal- Guidance-Non-Remote-July-2019.pdf
- Do you have appropriate trigger points for when the usual pattern of gambling becomes unusual (these should not be just financial)?
- How do you protect new customers (where a pattern of play cannot yet be established)?
- Are your staff sufficiently resourced and trained to spot problem gamblers and know how to report concerns? Are there clear procedures once a concern has been raised?
- Have you ensured you have clear, up-to-date, and fit for purpose AML policies and procedures available to all who require guidance?
- Have you ensured your policies and procedures have been informed by our guidance on AML and staff understand how it is implemented?
- Have you taken into account the Commission’s Money Laundering and terrorist financing risk assessment? Guidance can be found here: http://www.gamblingcommission.gov.uk/PDF/AML/Prevention-of-Money- Laundering-and-Combating-the-Financing-of-Terrorism-5th-Edition.pdf
- Have you ensured your cash desk policies are sufficient to capture all elements of a customers’ play?
For further guidance on good practice read our ‘Enforcement report’ at https://beta.gamblingcommission.gov.uk/policy/raising-standards-for-consumers-compliance- and-enforcement-report-2019-20
Posted on 04 February 2021