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Public statement

William Hill Organization Limited Public Statement

Published:

28 March 2023

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Our public statements make reference to breaches of the Licence Conditions and Codes of Practice (LCCP) requirements which were in effect at the time of the breach. In some cases, the requirements have since been updated.

Operators are expected to consider the issues outlined below 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 gambling facilities are provided in compliance with the Gambling Act 2005 (opens in new tab)(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.

William Hill Organization Limited Executive Summary

This investigation followed a compliance assessment and resulted in the commencement of a section 116 regulatory review¹ of William Hill Organization Limited (WH Retail / the Licensee), Combined Non-Remote Operating Licence number: 000-002752-N-102413-014.

The regulatory review found failings in the Licensee’s processes which were aimed at preventing Money Laundering (ML), and safer gambling.

Between 1 January 2020 and 18 October 2021², the Licensee failed to comply with certain Licence Conditions and Codes of Practice (LCCP), specifically:

paragraphs 1, 2 and 3 of licence condition 12.1.1, requiring the conducting of an appropriate risk assessment, the implementation of appropriate policies and procedures and keeping such policies under review to ensure their effectiveness, all with the objective of preventing ML and Terrorist Financing (TF)
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 the Licensee and in line with our Statement of principles for licensing and regulation, the Licensee will voluntarily make a payment in lieu of a financial penalty of £2,999,850 which includes a divestment of £244,026.95, and will vary its licence to add additional licence conditions.

William Hill Organization Limited Findings

The investigation found:

failings in the Licensee’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.

We found that, between January 2020 and 18 October 2021, the Licensee had been in:

Breach of paragraph 1 of licence condition 12.1.1

Breach of paragraph 1 of licence condition 12.1.1, which 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.”

The Licensee accepted it breached this licence condition as its ML/TF risk assessment did not sufficiently reflect the Commission’s expectations or fully take into account the Commission’s ML/TF risk assessment of the British gambling industry.

The failings were that the Licensee’s risk assessment did not:

make explicit reference to specific risks in relation to TF.
make specific reference to risks associated with customer bank account changes, risks of fraudulent or dyed notes or business risks in the geographical risk section³
mention how the Licensee monitors customers who place bets in multiple betting offices, how this was reviewed and the mitigations in place.

Breach of paragraphs 2 and 3 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.”

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.”

The Licensee accepted:

weaknesses and shortcomings in relation to the adequacy and maintenance of its policies and procedures, and their implementation
certain customers identified by the Commission were able to stake large amounts of money without being monitored or scrutinised to the standard expected by the Commission:

a customer profile was compiled for Customer A after the customer had gambled £34,000 and lost £16,000 between 20 May and 1 June, 2021. Despite staking a £19,000 in a single bet no Source of Funds (SoF) evidence was requested
customer B staked £39,324 and lost £20,360.67 between 16 and 28 October 2020. No documentation was obtained by the Licensee which would support levels of gambling spend to mitigate the ML risk of high spend taking place over a short period of time
customer C staked a total of £276,942 with a total loss of £24,395 between 17 August and 16 October 2020. SoF evidence was requested on 12 October 2020, however, to date no evidence has been seen by the Licensee
the Licensee acknowledged that AML thresholds have since been revised and has confirmed that it has since amended its bet acceptance process

in relation to certain customers identified by the Commission, it placed over-reliance on recycled winnings
in particular cases, the Licensee failed to appropriately track customers across multiple Licensed Betting Offices (LBOs). The Commission found instances where the Licensee could have more effectively tracked customers across its LBO estate using information available to it. The Commission recognises the challenges of tracking customers using multiple premises in the non-remote Licensed betting offices.

The Commission’s review of the specific customers identified during the compliance assessment found no evidence of criminal spend with the Licensee.

Failure to comply with Paragraph 1 and 2 of 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:

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.”

The Licensee accepted it was not fully in compliance with SRCP 3.4.1 as:

with certain customers, the Licensee did not identify changes in the customer behaviour which should have provoked consideration of whether the customer was experiencing harm:

a safer gambling interaction was conducted with Customer D only after he had placed and had accepted an £18,000 bet - no interaction took place when accepting his bet as the Commission would have expected
Customer A usually places small stakes but then placed a £19,000 bet. Although a safer gambling interaction was conducted during which he stated he was ‘fine with his spend’, the Licensee failed to proactively further consider him from a responsible gambling prospective

it had insufficient controls in place to protect new customers, and to effectively consider high velocity spend and duration of play until the customer may have been exposed to the risk of substantial losses in a short period of time:

after its retail premise had been re-opened following the Covid pandemic lockdown, the Licensee allowed Customer F to lose £10,600 in two days without a safer gambling interaction.
despite being unknown and staking £42,253 in 130 bets over a three-day period, staff did not identify Customer G as being at risk of experiencing harms associated with gambling or undertake any customer interactions

in particular cases, the Licensee did not conduct interactions with customers who may be at risk of experiencing harm early enough in the customer journey
there was a lack of evidence of evaluation of the effectiveness of individual customer interactions and a lack of record keeping limited staff in properly tailoring their interactions with historic interactions in mind.

William Hill Organization Regulatory Settlement

This regulatory settlement consists of:

a total payment of £2,999,850 in lieu of a financial penalty, which will be directed towards socially responsible purposes, which includes a divestment of £244,361.57
agreement to the publication of a statement of facts in relation to this case
agreement by the Licensee to vary its operating licence to add conditions to its operating licence, namely:
- to appoint a Board-level sponsor, either reporting directly to the Chair or the Executive Chair, to assume responsibility for compiling and progressing a 12-month action plan to deal with post case activity, and
- undertake a follow-up independent audit of relevant policies and procedures by 13 February 2024 to ensure whether it is effectively implementing its AML and safer gambling policies, procedures and controls, and that any further recommendations made by the independent audit should be implemented thereafter
payment of the Commission’s costs of conducting the review.

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
there has been a repeated breach or failure by the operator or other group companies
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 Licensee’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 – the Licensee implemented an action plan to remedy its failings
the Licensee procedurally met the Commission’s timetable in respect of providing material and, where such material could not be provided within the expected time period, sought an extension.

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 procedures, and are findings adequately recorded?
do you efficiently record all compliance 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?
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 the level of detail provided?
have your staff received sufficient AML and social responsibility training?

Notes

¹ The Commission commenced its regulatory review on 30 September 2021.

² There is one variance from the breach date listed - Paragraph 1 of licence condition 12.1.1 was breached between 1 January 2020 and 2 May 2022.

³ The AML Guidance and the Commission’s ML/TF risk assessment sets out a number of factors licensees must and should consider when undertaking their own ML/TF risk assessments. In addition, the Licensee is required, by virtue of Regulation 18(2)(a) of the Regulations, to take these documents into account when carrying out its own ML/TF risk assessment.

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