A subsidiary of gambling operator 888 has agreed to pay £2.9m in a regulatory settlement after the Gibraltar Gambling Commissioner found failings in their KYC processes.
In lieu of any financial sanction, the £2.9m settlement will be payable to the Gibraltar Consolidated Fund, with part of the settlement to be made available for use by the Centre of Excellence for Responsible Gaming at the University of Gibraltar.
Gibraltar licensees are also expected to factor the learnings from this case into their own risk assessments, systems and controls.
In a statement, the Gibraltar Gambling Division detailed how last January 888 had suspended ‘VIP’ activities in certain dot com markets, particularly the Middle East.
“In January, it was agreed with the Commissioner that 888 would carry out its own internal review into historical anti money laundering and terrorist financing controls operated in respect of the identified cohort,” the Gambling Division said.
“In parallel new policies and procedures were introduced and relevant accounts were subject to an updated risk assessment process.”
The exercise was completed by April 2023, and found failings in its procedures.
An AML review conducted by Gambling Division staff, assisted by 888 management, looked at current and historical systems, and controls in place by the licensee, with a specific focus on the suspended activities.
In terms of the historical compliance approach, the Gambling Division found weaknesses in its KYC obligations.
The Division found failures to properly record and verify address details in certain cases.
There was also an historical overreliance on high thresholds for Enhanced Due Diligence (EDD) intervention and a lack of clarity in the threshold approach, the Division said.
“There was a lack of consistency in the effectiveness of EDD checks, which were found to be weak on certain accounts with EDD not being conducted quickly enough,” the Division said.
“Consequently there was a failure to identify the suspicious nature of a very limited number of accounts at the earliest opportunity and to report same.”
The Division added there was an inconsistent approach with regards to keeping accounts open with restrictions as opposed to closing accounts.
“There was an overreliance on open-source checks and a failure to ask customers to provide the necessary source of funds and source of wealth documentation, at the appropriate time, in a number of cases though not in the majority of cases.”
When agreeing the settlement, the Gambling Commissioner considered how 888 Management had promptly self-declared the issue, and proactively suspended all the accounts for this cohort with immediate effect resulting in significant revenue loss.
“There was an immediate implementation of an internal compliance review and systems and controls were quickly improved through a programme of work overseen by 888 Management, remediating the identified historical weaknesses,” the statement said.
There was also a Board commitment to rectifying this issue and to dealing openly and transparently with the Commissioner.
Further factors such as 888 compliance management and staff working collaboratively with Gambling Division staff on a subsequent verification exercise were considered.
“For the avoidance of doubt no specific cases were identified which involved 888 dealing with the proceeds of crime or terrorist financing,” the statement said.
The Division added: “888 continues to be considered a fit and proper entity to hold licences in Gibraltar. 888 has enhanced its policies and procedures in remediating the identified historical deficiencies.”