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Public statement

Greentube Alderney Limited Public statement

Published:
2 December 2021
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Key failings

  • 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)
  • breach of Paragraph 15 of Licence Condition 15.2.1 (Reporting key events)
  • failure to comply with Social Responsibility Code Provision 3.4.1 paragraph 1 and 2 - Customer interaction.

Operators are expected to consider the issues outlined and review their own practices to identify and implement improvements in respect of the management of customers’ accounts.

Introduction

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.

Greentube Alderney Limited Executive summary

This investigation resulted in the commencement of a section 116 regulatory review of Greentube Alderney Limited, (Greentube), Combined Remote Operating Licence number: 039050-R-319315-014. The Commission commenced its regulatory review on 16 December 2020.

The regulatory review found failings in Greentube’s processes which were aimed at preventing money laundering (ML) and protecting vulnerable people. These failings were found on two of Greentube’s casino and betting websites, admiralcasino.co.uk and bellfruitcasino.com.

Between December 2019 and November 2020 Greentube failed to comply with the Licence conditions and codes of practice (LCCP), specifically: 

  • paragraphs 1, 2 and 3 of Licence Condition 12.1.1, requiring compliance with the prevention of 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”)
  • Licence Condition 15.2.1 requiring operators to report key events to the Commission
  • 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.

Taking into account remedial action taken by Greentube and in line with our Statement of principles for licensing and regulation, Greentube will pay a total of £685,000 in lieu of a financial penalty.

Greentube Alderney Limited Findings

The investigation and our subsequent regulatory review found:

  • failings in Greentube’s implementation of anti-money laundering (AML) policies, procedures and controls
  • deficiencies in its responsible gambling policies, procedures, controls and practices, including weaknesses in implementation
  • weaknesses in its reporting arrangements.

Between December 2019 and November 2020 Greentube has been in breach of the following licence conditions and failed to comply with the following social responsibility code provisions.

Breach of paragraph 1 of license 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.”

Greentube accepted its AML Risk assessment (the Risk Assessment) did not explicitly acknowledge:

  • that Greentube would ensure it would keep adequate records in writing of the steps it had taken to identify and assess the risks of money laundering to which its business is subject as required by Regulation 18(4) of the 2017 Regulations
  • that when new products, business practices or technologies are adopted, appropriate measures would be taken to assess and mitigate any money laundering risk this may cause
  • that consideration had been given to the low risk factors outlined in the Commission’s guidance. Regulation 37(3) of the 2017 Regulations and paragraph 6.93 of the Commission's guidance 'The prevention of money laundering and combating the financing of terrorism - Guidance for remote and non-remote casinos' (the AML Guidance).

Breach of paragraph 2 of license 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.”

Greentube accepted:

  • its policies failed to make adequate provision for monitoring money laundering risks during out-of-hours
  • its processes at the time of the failings placed undue reliance on slots games being a lower risk product from a money laundering perspective, which had the effect of allowing some customers to deposit, gamble and lose significant sums before source of funds were requested
  • the record keeping processes in place at the time of the Commission’s investigation were inadequate and it was not always able to provide clear evidence of an audit trail to demonstrate decision making.

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.”

Greentube accepted:

  • relevant employees did not interrogate customer source of fund and source of wealth information with sufficient critical scrutiny, which meant that undue reliance was placed on open source or incomplete information when further corroborative evidence should have been sought
  • there were unacceptable delays to obtaining confirmation of ownership of the payment methods used by certain customers and on occasion ownership of the payment method was taken at face value without seeking independent confirmation of the same.

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.”

Greentube accepted it did not:

  • carry out source of wealth (SOW) / source of funds (SOF) immediately after identification of a politically exposed person (PEP) instead it carried out such checks after the PEP had hit a £1,000 deposit threshold which is contrary to regulation 35(5)(b) of the Money Laundering Regulations 2017 (MLR 2017)
  • properly take into account of the Commission’s AML Guidance and its MLTF Risk Assessment when preparing its own ML/TF Risk Assessment (Regulation 18(2)(a) MLR 2017)
  • properly articulate the methodology that it had used to prepare its ML/TF Risk Assessment, nor explain what information and data had been used to assess and analyse ML/TF risks presented to Greentube’s business (Regulation 18(4) MLR 2017)
  • take appropriate measures in preparation for, and during, the adoption of new products or business practices, by assessing any money laundering risks arising from such adoption and implementing specific policies, procedures and controls to mitigate those risks (Regulation 19 MLR 2017)
  • fully adhere to the requirement to screen relevant employees both before being appointed and during the course of their employment (Regulation 21(1)(b) MLR 2017.

Greentube accepted it relied too heavily on ineffective threshold triggers and generally lacked information regarding how much a customer should be allowed to spend based on income, wealth or any other money laundering risk factors (Regulation 33 MLR 2017).

Breach of Paragraph 15 of Licence Condition 15.2.1 (Reporting key events)

A key event is an event that could have a significant impact on the nature or structure of a licensee’s business. Licence condition 15.2.1 requires licensees to notify the Commission, or ensure the Commission is notified, in such form or manner as the Commission may from time to time specify, of the occurrence of specified key events as soon as reasonably practicable and in any event within five working days of the licensee becoming aware.

Paragraph 24 licence condition 15.2.1, applicable at the time of the breaches, and currently paragraph 15 of licence condition 15.2.1, requires the reporting of 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). Under this key event, 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. The requirement to submit this key event within 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

Greentube accepted that they failed to submit key events to the Commission within 5 working days of submission of six suspicious activity reports (SARs) to the National Crime Agency.

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. SRCP 3.4.1 (amended from 31 October 2019) states:

“1. Licensees must interact with customers in a way which minimises the risk of customers experiencing harms associated with gambling. This must include:

  1. identifying customers who may be at risk of or experiencing harms associated with gambling.
  2. interacting with customers who may be at risk of or experiencing harms associated with gambling.
  3. understanding the impact of the interaction on the customer, and the effectiveness of the Licensee’s actions and approach.
  1. Licensees must take into account the Commission’s guidance on customer interaction.”

Greentube accepted that:

  • the series of financial and non-financial safer gambling triggers used to proactively identify when customers may be experiencing harms were not always effective
  • it was overly reliant on its £1,000 30-day net loss threshold to identify potential signs of problematic gambling and its processes for identifying other markers of potential harm were largely reactive, and did not properly take into consideration such things as the length, frequency and time-of-day of gambling to inform its decision making
  • its safer gambling and AML teams failed to share relevant information with each other to allow each team a holistic view of the customer profile
  • customer interaction processes were overly reliant on setting proactive deposit limits, rather than carrying out interactions or affordability assessments to inform risk-based decision making
  • it used average income data to set deposit limits which were, on occasion, set too high, and which made assumptions based on other open-source information which should have been corroborated against other independent sources of information.

Greentube Alderney Limited Regulatory settlement

This regulatory settlement consists of:

  • £685,000 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 statement of facts in relation to this case
  • Greentube has agreed to vary its operating licence to add a specific condition to carry out a third-party audit to review its compliance with the Licensing condition and codes of practice within twelve months, the findings of which it will share with the Commission
  • payment of £8,789.86 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:

Aggravating factors

  • 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 may mean other customers were affected that the Commission has not reviewed
  • Greentube’s senior management should have been aware of governance issues that lead to the breaches, given their significance.

Mitigating factors

  • the extent of steps taken to remedy the breach
  • Greentube’s early recognition of failings
  • licensee has been co-operative throughout its dealings with the Commission.

Good practice

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?
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