Keeping Online Gaming Clean as reported in http://www.igamingbusiness.com/news/videoslots-and-casumo-fined-social-responsiblity-failings – The UK Gambling Commission’s (UKGC) ongoing investigation into how the industry tackles problem gambling and prevents money laundering has seen the regulator take action against Videoslots and Casumo.

Following reviews of each company’s operating licence, the Commission has imposed a £5.85m (€6.6m/$7.5m) financial penalty on Casumo, and agreed a £1m regulatory settlement with Videoslots. A third company, Malta-licensed CZ Holdings, which operates the Dr Vegas site, surrendered its licence after a review had been launched.

Nine other (unnamed) operators have been issued with warnings about their future conduct, and a further six remain under investigation. The investigation has already seen Stride Gaming subsidiary Daub Alderney hit with a £7.1m fine, meaning the regulator has issued £13.95m in penalties as a result of social responsibility failings.

“I hope today’s announcement will make all online casino operators sit up and pay attention, as our investigations found that a large number of operators and their senior management were not meeting their obligations,” UKGC chief executive Neil McArthur said.

“It is not enough to have policies and procedures in place,” he said. “Everyone in a gambling business must understand its policies and procedures and take responsibility for properly applying them.”

The UKGC revealed for the first time that it has taken action against individuals responsible for these failings. This has seen three Personal Licence (PML) holders surrender their certification, four individuals issued with a warning, and two sent letters on their conduct. Three additional PML holders are still under investigation.

McArthur added: “Anyone in a position of authority needs to be aware that we will not only act against businesses when we take regulatory action – we will also hold individuals to account where they are responsible for an operator’s failings.”

In the case of Casumo, the operator was found to have failed to put appropriate risk assessment processes in place to determine whether its iGaming offerings could be used to launder money, required under Licence Condition 12.1.1(1). The regulator warned that such processes were not in place in a letter dated November 2017, with Casumo accepting that it was in breach of the licence condition in March 2018, setting out a revised, compliant process later that month.

The investigation also discovered that Casumo was not conducting proper due diligence processes on customers, and failing to determine the source of players’ funds. The Commission also found that proper checks to ensure customers were not displaying signs of unhealthy gambling habits had not been carried out. Three Casumo account holders were deemed to be problem gamblers, but none had been flagged as at-risk by the operator.

As a result of the failings the operator was issued with the £5.85m fine, and had additional conditions attached to its UK licence. It must appoint a qualified Money Laundering Reporting Officer, who must also take annual refresher training, alongside all other PML holders, senior management and key staff.

Casumo must also bring in external auditors to assess its anti-money laundering and social responsibility processes.

In Videoslots’ case, the company was found to have insufficient customer due diligence processes, and failing to establish the source of customers’ funds. This saw a customer deposit more than £211,000 with the operator in November 2014, losing around £45,000 gambling on its site, without the Videoslots having conducted any sort of enhanced due diligence checks.

Another customer failed automated identity checks, resulting in them using a fraudulent driving licence to prove their identity, which was not noticed by Videoslots. This saw the customer allowed to register multiple fraudulent bank cards, making £17,405 in deposits before the criminal activity was flagged.

It also failed to make timely interventions when customers were spending significant amounts. This saw one individual deposit £412,000 between April 2016 and January 2017 without the operator attempting to contact them or determine the source of their funds.

The operator also failed to have a PML holder leading its regulatory compliance function, and did not notify the UKGC of internal management changes.

Videoslots agreed a £1m settlement with the regulator, with the money to be used to support National Responsible Gambling Strategy projects. The operator must also have its Money Laundering Reporting Officer, PML holders, senior management and relevant employees conduct annual anti-money laundering refresher training courses. It also made a payment of £12,000 towards the Commission’s investigative costs.

Secretary of State for Digital, Culture, Media and Sport Jeremy Wright warned operators to take note of the Commission’s readiness to issue fines to tackle social responsibility failings.

“Protecting vulnerable consumers is our prime concern, and it must be the priority for gambling operators too,” he said.

“There are robust requirements to safeguard players and prevent money-laundering which all businesses must adhere to if they wish to operate in the British market. I am pleased to see the Gambling Commission taking the strongest possible action when companies fail to meet their obligations.”