The gambling industry in the UK received yet another warning from the Gambling Commission, this time that if they do not carefully manage third party operations they are responsible for, they will face regulatory action. And the warning, as it is the common case recently, did not come cheap to the perpetrator, FSB Technology, which agreed to a hefty £634,300 settlement for its failings.
Third Party Oversight
In August 2019, the Gambling Commission announced it has instigated a review into the operations of FSB Technology Ltd, under s116 of the Gambling Act. The practice to contract provisions of licensed activities to third parties, white labels, does not exclude the licensee from responsibility regarding the behavior of the third parties in terms of fair, safe and crime-free gambling.
“All operators should pay close attention to this case as it shows that we hold all licensees fully responsible for third party relationships – and we will act against any of our licensees that do not manage third parties appropriately. These were blatant breaches of rules we have put in place to ensure gambling is fair, safe and crime-free.”Richard Watson, Executive Director, Gambling Commission
The review into the FSB’s practice came up with significant failings regarding anti-money laundering, marketing and social responsibility processes, with the license holder lacking sufficient oversight into the activities of its white label partners.
The Commission also found out there had been no effective anti-money money laundering and social responsibility policies and procedures for the period between January 2017 and August 2019.
Failings that Need to Be Addressed… and Penalised
The Gambling Commission referred to a case of ineffective customer interactions with a customer who clearly displayed indications of problem gambling, yet was allowed to spend £282,000 over an 18-month period.
On another occasion, a marketing campaign was sent to 2,324 customers who had previously self-excluded, a finding no big surprise on the background of another that a VIP manager had been acting without adequate oversight, not even being sufficiently AML trained.
For these failings into its oversight, marketing and money-laundering processes, FSB Technology agreed to settle with the regulator, £600,000 for the National Strategy to Reduce Gambling Harms fund, as well as a further £34,300 to cover the costs of the Gambling Commission incurred during the review.
FSB is also facing additional conditions on its license to ensure it conducts risk-based due diligence on its third party partners. Regarding the FSB’s personal management license holders personnel, the Commission is still in the process of reviewing their actions.
The UK Gambling Commission has been relentless in the pursuit of its objectives, collecting a total of £58.9 million in financial sanctions and voluntary settlements from June 2014 to December 2019, a freedom of information request /FOI/ submitted by the Gambling Business Group /GBG/ revealed.