Progress Play Limited Public Statement
- breach of Licence Condition 12.1.1 paragraphs 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.
- 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.
Licensed gambling operators have a legal duty to ensure that their gambling facilities are being 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 and open way
- protect children and other vulnerable people from being harmed or exploited by gambling.
Progress Play Limited Executive Summary
This investigation resulted in the commencement of a section 116 regulatory review of Progress Play Limited’s, (Progress Play), Combined Remote Casino and Betting Operating Licence number: 000-039335-R-319313-017. The Commission commenced its regulatory review on 14 August 2020.
The regulatory review found failings in Progress Play’s processes which were aimed at preventing money laundering and protecting vulnerable people. Progress Play failed to comply with the Licence conditions and codes of practice (LCCP), specifically:
- paragraphs 2 and 3 of Licence Condition 12.1.1, requiring measures for 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
- paragraphs 1 (a), (b), (c) 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.
Progress Play fully cooperated throughout the course of our investigation and has accepted that its policies and procedures in respect of anti-money laundering and safer gambling were not appropriate, nor implemented effectively. It has accepted that it failed to act in accordance with conditions of its operating licence. Progress Play provided an action plan during the investigation and took action to expand and improve their compliance capacity.
Taking into account remedial action taken by Progress Play and in line with our Statement of principles for licensing and regulation, Progress Play will make a payment in lieu of a financial penalty and divestment to the sum of £175,718.00 It will also pay Commission costs of £12,466.35.
Progress Play Limited Findings
Breach of paragraph 2 of licence condition 12.1.1
Licence condition 12.1.1 (2) states that: "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.".
Commission Officials consider that Progress Play failed to establish and maintain appropriate policies, procedures and controls to prevent money laundering and terrorist financing.
Progress Play accepted:
- customers were given 14 days to provide information to support their Source of Funds (SOF) and during this period were able to continue to gamble. This approach did not sufficiently mitigate money laundering risks.
Breach of paragraph 3 of licence condition 12.1.1
Licence condition 12.1.1(3) states that: “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.”.
Commission Officials consider Progress Play failed to ensure that their policies, procedures and controls were implemented effectively, kept under review, revised appropriately to ensure they remain effective and take into account any applicable learning or guidelines published by the Gambling Commission.
Progress Play accepted:
- a failure to apply its own SOF policy when customers hit triggers
- whilst customer profiles examined did contain some evidence of SOF information being recorded, there was a lack of a clear rationale regarding decision-making
- there was a failure to effectively review SOF information provided, resulting in customers being able to spend more than their known earnings
- there was a lack of ongoing customer due diligence and enhanced customer due diligence. Customers were able to gamble following triggers being hit and prior to SOF evidence being provided to the Licensee and the Licensee establishing the customer’s SOF.
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 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.".
Progress Play accepted it did not:
- establish and maintain policies, controls and procedures to mitigate and effectively manage the risks of money laundering and terrorist financing identified in a risk assessment
- establish and maintain appropriate risk-sensitive policies and procedures
- appropriately scrutinise transactions throughout customer business relationships and obtain SOF evidence in accordance with the customer’s risk profile
- apply adequate customer due diligence measures, including, but not restricted to, scrutiny of transactions undertaken throughout the course of the business relationship (including, where necessary, the SOF) to ensure that the transactions were consistent with their knowledge of the customer, the customer’s business and risk profile.
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:
- 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.
- Licensees must take into account the Commission’s guidance on customer interaction.
Progress Play accepted that:
- there is no evidence Progress Play undertook any review regarding the effectiveness or impact of the interactions it undertook with customers
- they failed to implement proactive gambling control measures, as referenced in its Responsible Gaming & Interaction procedure for customers
- they did not conduct affordability assessments for individuals picked up by existing or new thresholds and triggers which indicate consumers experiencing harm – this is contrary to Paragraph 2(e) of the Commission’s updated guidance dated 12 May 2020
- VIP agents may have received pay incentives linked to the take up of bonus offers and promotions. Given this, Commission officials consider Progress Play may not have taken into account paragraph 2(g) of the Commission’s guidance (May 2020) which states Licensees should "Stop bonus offers or promotions to customers displaying indicators of harm"
- in relation to the safer gambling reviews, it was not clear what action was taken by Progress Play, the outcome of that action, nor what the customer’s response was.
Failure to consider OCP 3.4.2 (customer interaction)
Ordinary code provisions (OCP) do not have the status of licence conditions but set out good practice. Any departure from OCP provision by an operator may be considered by the Commission as part of a licence review.
Progress Play failed to consider OCP 3.4.2 which states operators should keep a record of customer interactions, and where an interaction has been ruled out the reasons for this. Where an interaction has taken place later, this should also be recorded.
Progress Play Limited Regulatory Settlement
This regulatory settlement consists of:
- £175,718.00 payment in lieu of a financial penalty and divestment, which will be directed towards delivering the National Strategy to Reduce Gambling Harms
- agreement to the publication of a statement of the facts in relation to this case
- payment of £12,466.35 towards the Commission’s costs of investigating the case.
In considering an appropriate resolution to this investigation, the Commission had regard to the following aggravating and mitigating factors:
- there were repeated breaches of licence conditions as a result of the absence of internal controls and procedures
- the Licensee should have been aware of the breaches
- many of the breaches were serious and had an impact on the licensing objectives
- the breaches 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 industry
- the need to encourage compliance among other operators.
- there was timely an open co-operation with the investigation undertaken by the Commission and no attempt to conceal the extent of the breaches
- an ongoing programme of remedial action was commenced in response to the breaches being brought to the Licensee’s attention
- Progress Play provided an action plan during the investigation and took action to expand and improve their compliance capacity
- the Licensee made an offer of a regulatory settlement
- the Licensee has shown insight into the seriousness of the breaches.