BV Gaming Limited Public Statement
- breach of Licence Condition 7.1.1 paragraph 1 - Fair and transparent terms and practices
- breach of Licence Condition 12.1.1 Paragraphs 1, 2 and 3 - Prevention of money laundering and terrorist financing
- breach of Paragraph 1 of Licence Condition 12.1.2 - Anti-money laundering Measures for operators based in foreign jurisdictions
- social Responsibility code provision (SRCP) 3.4.1 - Customer Interaction
- SRCP 5.1.9 paragraph 2 - Other marketing requirements.
Operators are expected to consider the issues previously outlined and review their own practices to identify and implement improvements in respect of the management of customers’ accounts.
Licensed gambling operators have a legal duty to ensure their gambling facilities are provided in compliance with the Gambling Act 2005 (the Act), the conditions of their licence and in accordance with the licensing objectives, which are to:
- prevent gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime
- ensure that gambling is conducted in a fair, safe and open way
- protect children and other vulnerable people from being harmed or exploited by gambling.
BV Gaming Limited Executive Summary
Following a compliance assessment conducted in March 2020 (the Assessment), the Commission commenced a section 116 regulatory review1 of BV Gaming Limited, trading as BetVictor (BV Gaming), Combined Remote Operating Licence number: 039576-R- 319370-019. The regulatory review found failings in BV Gaming’s processes which were aimed at preventing money laundering (ML) and protecting vulnerable people.
Between 1 January 2019 to 12 March 2020 BV Gaming failed to comply with the Licence conditions and codes of practice (LCCP), specifically:
- paragraph 1 of Licence condition 7.1.1 requiring compliance with fair and transparent terms and practices
- paragraphs 1, 2 and 3 of Licence condition 12.1.1, requiring licensees to take steps to prevent money laundering and terrorist financing
- Licence Condition 12.1.2 requiring operators based in foreign jurisdictions to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information of the Payer) Regulations 2017 (the 2017 Regulations)
- paragraphs 1 and 2 of Social responsibility code provision (SRCP) 3.4.1, requiring licensees to interact with customers in a way which minimises the risk of customers experiencing harms associated with gambling, and to take into account the Commission’s guidance on customer interaction
- paragraph 2 of SRCP 5.1.9 requiring licensees to comply with marketing requirements.
BV Gaming submitted a remedial action plan with the Commission within 2 days of receiving the notice commencing the licence review on 7 April 2020, which it then preceded to implement, as it had committed to the Commission to do.
Taking into account remedial action taken by BV Gaming and in line with our Statement of principles for licensing and regulation, BV Gaming will divest £352,000.00, gross gambling yield (GGY) gained as a result of the failings and pay a total of £1,728,000 in lieu of a financial penalty.
1 The Commission commenced its regulatory review on 7 April 2020.
BV Gaming Findings
The investigation and our subsequent regulatory review found:
- failings in BV Gaming’s implementation of anti-money laundering (AML) policies, procedures and controls
- failings in relation to BV Gaming’s AML risk assessment which did not sufficiently meet the standard expected at that time in adequately identifying risks posed by money laundering and terrorist financing and the mitigating controls as per the Commission’s money laundering and terrorist financing risk assessment guidance
- deficiencies in its responsible gambling policies, procedures, controls and practices, including weaknesses in implementation.
We found that between 1 January 2019 to 12 March 2020 BV Gaming had been in:
1. Breach of paragraph 1 of licence condition 7.1.1
Licence condition 7.1.1(1) states “Licensees must ensure that the terms on which gambling is offered, and any consumer notices relating to gambling activity, are not unfair within the meaning of the Consumer Rights Act 2015. Licensees must comply with those terms.”
Although this was an isolated failing and not systemic, BV Gaming accepted:
- at the time of the Assessment, it was not in full compliance with the Competition and Markets Authority (CMA) principles 15 and 18 (and therefore in technical breach of) licence condition 7.1.1 as issues were identified with its promotional terms and conditions across its channels, namely:
- it was not clear in its terms and conditions whether an attempt is made to try and repay the deposit balance to the last payment method used by the customer when an account is inactive for 12 months. Where an account with a credit deposit balance has been inactive for at least 12 months, operators must try to repay it to the last payment method used.
Further, an unfair term was identified in one promotion whereby the wording suggested a promotion could be cancelled or amended by the Promoter. Operators have a legitimate interest in being able to amend or remove a promotion before a consumer has signed up or acted upon it, however a promotion should not be withdrawn, or amended where a consumer has already signed up. In this case, BV Gaming did not actually cancel or amend promotions where a consumer had already signed up but accepted the Commission’s view that the terms and conditions needed to be clearer that it would not do so. As such, the learning for the industry is to ensure terms and conditions clearly state that whilst promotions could be cancelled or amended by an operator, that is without prejudice to any customer that has already signed up to the promotion in question.
2. Breach of paragraph 1 of licence condition 12.1.1
Licence condition 12.1.1(1) states: “Licensees must conduct an assessment of the risks of their business being used for money laundering and terrorist financing. Such risk assessment must be appropriate and must be reviewed as necessary in the light of any changes of circumstances, including the introduction of new products or technology, new methods of payment by customers, changes in the customer demographic or any other material changes, and in any event reviewed at least annually.”
BV Gaming accepted it was in breach of licence condition 12.1.1(1) as its AML Risk assessment (the Risk Assessment) reviewed at the time of the Assessment did not sufficiently reflect the Commission’s expectations or fully comply with the Commission’s AML risk assessment as set out in our guidance.
Examples of failures included:
- not adequately including risk factors such as high spenders or consumers using multiple gambling accounts or wallets
- drawing on a risk assessment that lacked detail considering the large size of the business
- no rationale was provided on how the risk ratings for the broad areas were arrived at, not taking into account information on the risks of ML and TF made available to them by the Gambling Commission, including the Commission’s guidance, MLTF risk assessment, and recent risk bulletins.
3. Breach of paragraph 2 of licence condition 12.1.1
Licence condition 12.1.1 (2) states: “Following completion of and having regard to the risk assessment, and any review of the assessment, licensees must ensure they have appropriate policies, procedures and controls to prevent money laundering and terrorist financing.” BV Gaming accepted at the time of the Assessment its policies and processes were not fully compliant and it was in breach of Licence condition 12.1.1(2) as:
- there was no evidence of effective due diligence, in the majority of the customer accounts reviewed
- due to ineffective triggers, certain reviewed customers were able to deposit and spend large sums of money before source of funds (SoF) and affordability were established. Where customer accounts were in a winning position, risk reviews were undertaken in an inconsistent manner. This resulted in incomplete enhanced due diligence (EDD) reviews being undertaken (insofar as source of funds was not adequately established) due to triggers not being met
- customers could continue to gamble after hitting the initial trigger as they would not hit any further triggers for significant periods, increasing both AML and safer gambling (SG risk
- there was no evidence in the customer accounts reviewed of sufficient information being provided by the customer to substantiate the open-source profile – such as occupation details, and potential earnings, - to determine the level of customer risk and consequently decide the level of due diligence and monitoring required.
4. Breach of paragraph 3 of licence condition 12.1.1
Licence condition 12.1.1(3) states “Licensees must ensure that such policies, procedures and controls are implemented effectively, kept under review, revised appropriately to ensure that they remain effective, and take into account any applicable learning or guidelines published by the Gambling Commission from time to time.”
BV Gaming accepted at the time of the Assessment, its policies and processes were not fully compliant, and it was in breach of licence condition 12.1.1(3) and it needed a more coordinated approach to managing ML/TF risk and must focus on ensuring it can properly evidence the decisions it takes as:
- there appeared to be no evidence of effective due diligence, in the majority of the customer accounts reviewed
- the review of the customer accounts did not give assurance that effective decisions were being made on what actions should be taken on a customer account following EDD review and the evidence to be obtained
- there were no controls in place to ensure the account restrictions were placed on an account when requested by the customer
- there was an overreliance on automated thresholds to request SoF. This meant the AML function failed to consider individual customer risk, based on what was known or not known about the customer
- whilst we saw evidence of regular meetings taking place, specifically looking at the top 25 high-risk customers, we did not see evidence of any ongoing monitoring of customers unless they hit the thresholds
- tier 1 VIP customers should have had an EDD review conducted and signed off by the EDD team and an SG review in addition to an SG interaction. During the Assessment the Licensee could not confirm where the reviews were stored and there was no evidence of these processes being followed at onboarding for Tier 1 customers
- the Licensee could not provide any evidence to support reviews having been undertaken for onboarding of any VIPs.
5. Breach of Paragraph 1 of Licence Condition 12.1.2 (Anti-money laundering Measures for operators based in foreign jurisdictions)
Paragraph 1 of this condition has been in place since October 2016 and requires that:
- “Licensees must comply with Parts 2 and 3 of the Money Laundering Regulations 2007 (UK Statutory Instrument No. 2157 of 2007) as amended by the Money Laundering (Amendment) Regulations 2007 (UK Statutory Instrument No. 3299 of 2007), or the equivalent requirements of any UK Statutory Instrument by which those regulations are amended or superseded insofar as they relate to casinos (the MLR) whether or not the MLR otherwise apply to their business”.
BV Gaming accepted:
- it failed to thoroughly implement the measures described in the relevant parts of the 2007 Regulations and 2017 Regulations
- at the time of the Assessment, it was not in full compliance with (and therefore in breach of) licence condition 12.1.2.
6. Failure to comply with Paragraph 1 and 2 of social responsibility code provision (SRCP) 3.4.1 (Customer Interaction)
Compliance with a SRCP is a condition of the licence by virtue of section 82(1) of the Act.
When in force, SRCP 3.4.1(e)(i) required the following: “Licensees must put into effect policies and procedures for customer interaction where they have concerns a customer’s behaviour may indicate problem gambling. The policies must include:
- e) specific provision for making use of all relevant sources of information to ensure effective decision making and to guide and deliver effective customer interaction including in particular:
- i. provision to identify at risk customers who may not be displaying obvious signs of, or overt behaviour associated with, problem gambling; this should be by reference to indicators such as time or money spent."
This SRCP was subsequently amended on 31 October 2019. This requires licensees to: “1. Licensees must interact with customers in a way which minimises the risk of customers experiencing harms associated with gambling. This must include:
- a. identifying customers who may be at risk of or experiencing harms associated with gambling.
- b. interacting with customers who may be at risk of or experiencing harms associated with gambling.
- c. understanding the impact of the interaction on the customer, and the effectiveness of the Licensee’s actions and approach”.
"2. Licensees must take into account the Commission’s guidance on customer interaction.”
BV Gaming accepted that at the time of the Assessment it was not fully in compliance with SRCP 3.4.1 as it failed to:
- implement/follow its policies and procedures to ensure ‘at risk’ customers were protected from gambling related harm
- take into consideration our guidance on customer interaction (CI)
- make use of all relevant sources of information to ensure effective decision making and to guide and deliver effective customer interactions.
7. Failure to comply with paragraph 2 of SRCP 5.19 (Other marketing requirements)
SRCP 5.1.9(2) requires:
- “Licensees must ensure that all significant conditions which apply to marketing incentive are provided transparently and prominently to consumers. Licensees must present the significant conditions at the point of sale for any promotion, and on any advertising in any medium for that marketing incentive except where, in relation to the latter, limitations of space make this impossible. In such a case, information about the significant conditions must be included to the extent that it is possible to do so, the advertising must clearly indicate that significant conditions apply and where the advertisement is online, the significant conditions must be displayed in full no further than one click away.”
BV Gaming accepted that at the time of the Assessment it was not in full compliance with (and therefore in technical breach of) SRCP 5.1.9 as significant conditions of a welcome offer were not displayed with sufficient prominence at the point of promotion despite there being sufficient space to do so.
BV Gaming Regulatory Settlement
This regulatory settlement consists of:
- £352,000 divestment of GGY gained as a result of the failings, which will be directed towards delivering the National Strategy to Reduce Gambling Harm
- £1,728,000 payment in lieu of a financial penalty, which will be directed towards delivering the National Strategy to Reduce Gambling Harms
- agreement to the publication of a public statement in relation to this case.
- payment of £11,000 towards the Commission’s costs of investigating the case.
In considering an appropriate resolution to this investigation, the Commission has had regard to the following aggravating and mitigating factors:
The aggravating factors were:
- the serious nature of the breaches identified
- the impact on the licensing objectives
- the breach arose in circumstances that were similar to previous cases the Commission has dealt with which resulted in the publication of lessons to be learned for the wider industry
- the need to encourage compliance among other operators
- the nature of the breaches means other customers the Commission is not aware of may be affected
- BV Gaming’s senior management should have been aware of governance issues that lead to the breaches, given their significance.
The mitigating factors were:
- the extent of steps taken to remedy the breach, including the implementation of an action plan
- BV Gaming’s early recognition of failings
- BV Gaming has been co-operative throughout its dealings with the Commission.
Gambling operators should take account of the failings identified in this investigation to ensure industry learning. Operators should consider the following questions:
- do you have formal processes in place to measure the effectiveness of your AML and safer gambling policies and are findings adequately recorded?
- do you efficiently record all compliance-related decisions and are you able to demonstrate to the Commission, on request, evidence of ongoing assessment, evaluation and improvement?
- do lessons learned from public statements flow into your policy and processes?- are your customer risk profiles formed by or linked to your money laundering and terrorist financing risk assessment?
- do you have a formalised process for analysing the effectiveness of customer interactions to ensure that reviews were adequately documented and consistent in their approach?
- do you log the types of behaviour which have triggered a customer interaction and keep sufficient records of interactions, along with decisions not to interact especially in terms of the level of detail provided?
- do you have out of hours arrangements in place?
- have your staff received sufficient AML and SR training?