The Gambling Commissioner of Gibraltar has announced that Virtual Global Digital Services Ltd, a subsidiary of 888 Holdings plc, has reached a settlement of £2.9 million ($3.7 million/€3.3 million) for failures related to Know Your Customer (KYC) and Enhanced Due Diligence (EDD) processes.
In January 2023, 888 Holdings revealed the suspension of "VIP" activities in specific online markets, particularly in the Middle East. In response to this announcement, the Commissioner required the company to conduct an internal review of historical Anti Money Laundering (AML) and terrorist financing controls in the identified markets.
As a result of the review, 888 implemented new policies and procedures. Accounts falling under the scope of the updated protocols underwent an enhanced risk assessment process. This comprehensive review and update were completed by April 2023.
Subsequently, the Gibraltar Gambling Division conducted its own examination and identified several weaknesses:
Ineffective KYC Controls: Address details were not correctly verified or recorded.
Historical Overreliance on High EDD Thresholds: Lack of clarity and consistency in EDD interventions based on threshold limits.
Inconsistent EDD Check Effectiveness: Delays in conducting checks, leading to some accounts with suspicious activity not being flagged promptly.
Inconsistent Approach to Account Handling: Inconsistencies between closing accounts and maintaining them with restrictions.
Overreliance on Open-Source Checks: Failure to request source of funds and source of wealth documentation.
In determining the penalty, the Commissioner considered that the company voluntarily disclosed the issues and promptly suspended all affected accounts. The Commissioner also noted 888's proactive stance in updating its processes and providing forthright information.
The investigation did not uncover any specific instances involving 888 dealing with proceeds of crime or terrorist financing.
This year, gambling regulatory bodies globally have issued fines and penalties totaling £309,952,410.
This settlement underscores the increasing emphasis regulators place on effective AML and KYC processes within the gambling and financial sectors, with companies facing substantial consequences for shortcomings in their compliance efforts.
By fLEXI tEAM