UK's Tightening Grip On Online Casinos:A Review Of Recent Fines

The United Kingdom (UK) has a thriving online casino industry with thousands of licensed operators. The latest statistics show 2,343 gambling operators in the market are licensed as of 31st March 2023.

Online casino games dominate the sector, generating £4.0 billion in Gross Gambling Yield (GG6), £3.2 billion of which was from slots games. The UK Gambling Commission (UKGC) 𑁋publisher of those statistics𑁋 acts as the regulatory body, ensuring fair play and responsible gambling practices.

However, in recent years, concerns about the social and financial impacts of online gambling have grown. To address these concerns, the UK government is proposing stricter regulations for online casinos.

In this article, we’ll explore recent fines that the UK government has imposed on Annexio and Rank Digital due to regulatory failures, and explain how your company can avoid the same fate.

Recent regulatory failures and financial penalties

In 2022, The UKGC conducted a regulatory review of Annexio Limited, a Jersey-based online gambling affiliate, and found serious breaches of licensing conditions and social responsibility codes between October 2019 and November 2021.

The investigation revealed failings in three key areas:

1.Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT):

Annexio did not adequately assess the risks of money laundering and terrorist financing within their business. They lacked appropriate policies and procedures to prevent such activities and failed to keep them updated as required.

2.Responsible Gambling:

Annexio fell short of the Social Responsibility Code provisions regarding customer interaction. They were unable to effectively identify customers at risk of gambling addiction or harm, nor did they have proper procedures in place to interact with and support such customers.

3.Reporting:

Annexio breached the regulations by failing to report key events to the UKGC. This included a critical software bug discovered in August 2020, which could have potentially impacted their operations.

These failures highlight vulnerabilities in Annexio’s systems and raise concerns about player protection and potential criminal activity.

To settle the case, Annexio agreed to pay a total of £612,000. This sum includes a £500,000 penalty directed towards reducing gambling harms and a £112,000 divestment to cover the UKGC’s investigation costs.

In the same year, UKGC fined Rank Digital Gaming, the online arm of the Rank Group, £700,557 for failings in its social responsibility practices. The breaches occurred between October 2019 and February 2021.

Rank Digital failed to adequately interact with customers who might be at risk of gambling addiction. The UKGC requires licensees to identify such individuals and take steps to minimize potential harm. This could involve setting deposit limits, offering self-exclusion tools, or contacting customers directly to assess their well-being.

For customers holding multiple accounts, Rank Digital didn’t monitor all accounts comprehensively. Ideally, a customer’s gambling behavior across all accounts should be considered to make informed decisions about potential risks. This oversight could have allowed problem gamblers to bypass restrictions on one account by simply using another.

The investigators also identified flaws in Rank Digital’s self-exclusion process, which allows individuals to block themselves from gambling platforms for a set period. Rank Digital failed to ensure complete exclusion, potentially enabling individuals struggling with addiction to continue gambling.

Pic: UKGC

These breaches highlight the importance of robust social responsibility practices in online gambling. The fine serves as a reminder to operators like Rank Digital to prioritize responsible gambling measures and adhere to UKGC regulations.
The settlement funds were directed towards the National Strategy to reduce gambling harms, emphasizing the industry’s shared responsibility in promoting healthy gambling habits.

Annexio and Rank Digital’s responses and efforts to rectify compliance

Following an investigation by the UKGC, Annexio Limited has acknowledged shortcomings in their AML/CFT risk assessment and CDD procedures.

Annexio has shown cooperation throughout the investigation and has implemented several new procedures to address the identified issues:

• Enhanced risk assessment: Annexio has updated its risk assessment to comprehensively address the previously overlooked areas.
  Stricter deposit limits: A temporary £500 monthly limit is placed on all new customers. Existing customers exceeding £10,000 in lifetime deposits without proper checks face a zero deposit limit until reviewed. All deposit limits are now non-bypassable by the customer.
• Increased resources: Annexio has bolstered its team with additional staff dedicated to CDD, EDD, and responsible gambling reviews.
  Customer account review: All active customers in the past six months underwent EDD review, with appropriate deposit controls implemented.
• Stricter documentation: Only PDF documents will be accepted for verification purposes.
  Improved processes: Annexio created a new AML/CFT and responsible gambling flowchart, which outlines revised customer interaction triggers.

These actions demonstrate Annexio’s commitment to improving their AML/CFT compliance and responsible gambling practices. The UKGC’s investigation serves as a reminder of the importance of robust risk assessment and thorough customer due diligence within the online gambling industry.

Meanwhile, Rank Digital Gaming has also acknowledged weaknesses in their approach to identify and interact with customers at risk of gambling harm. They have outlined several steps taken to address these issues.

Rank has implemented enhanced controls to identify duplicate accounts, particularly for those belonging to self-excluded individuals. This prevents them from circumventing restrictions by creating new accounts.

Their customer interaction processes were also greatly improved, moving beyond just setting deposit limits.

The company started conducting more comprehensive affordability assessments to inform risk-based decisions, as well as implementing additional measures to identify at-risk customers, such as monitoring gambling behavior patterns and changes in deposit velocity.

Not only that, Rank employs better communication strategies to engage with at-risk individuals and offer support options.

At last, Rank successfully improved the process for dealing with customers who breach self-exclusion rules. The success was achieved through several strategies, including stricter verification procedures, more swift account closures, and continuous breach reports to the UKGC.

How to prevent such breaches?

Your company can leverage Complaer to prevent financial penalties, as seen from the cases of Annexio Limited and Rank Digital Gaming.

The good news is, your company can leverage Complaer to prevent regulatory breaches and the consequent financial penalties.

Complaer offers a customizable AML solution that tailors to a company’s specific risk profile and industry. You can configure our Rule Engine to address the exact areas where your company fell short, such as creating custom AML rules for regular risk assessments.

These rules can identify and mitigate potential risks associated with Sanctions, PEPs (Politically Exposed Persons), and Adverse Media – all areas where Annexio Limited had deficiencies.

In addition, Complaer’s real-time transaction monitoring and live compliance updates ensure your company stays ahead of regulatory changes, preventing situations like Rank Digital Gaming’s reliance on outdated methods for identifying problem gamblers.