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A number of specialists have weighed in on the UK Gambling Commission's £19.2 million (€21.9 million/$23.7 million) record regulatory settlement with William Hill.
The settlement was imposed by the Commission on William Hill Group and its subsidiaries for a number of major social responsibility and anti-money laundering (AML) failures that occurred between 2020 and 2021.
The settlement is the highest single financial penalty ever disclosed by the SEC, exceeding the previous record settlement of £17.0m imposed with Entain in August 2022.
According to Lloyd Firth, counsel in WilmerHale's UK white collar defence and investigations practise, the large sum “appears to be both a consequence of the seriousness of the failings that were identified and a clear signal to the UK gambling industry that the Commission is willing and able to take significant regulatory enforcement action.”
However, Firth stressed that the decision should not be interpreted as an indication of increased enforcement, but rather as a continuation of the regulator's continuous enforcement action over the preceding years.
This was mirrored by Nicola Finnerty, partner in Kingsley Napley LLP's criminal litigation unit, who stated that the actions showed the regulator "reinforcing" its position as one of the most proactive of the UK's anti-money laundering supervisors.
License suspension is on the table.
In a statement accompanying the regulatory settlement, Commission CEO Andrew Rhodes stated that the revealed flaws were "so prevalent and disturbing" that licence suspension was seriously considered.
In the end, the Commission did not choose this route, although Finnerty claimed that the threat of suspension may have been helpful in eliciting collaboration from William Hill.
“Whilst we have yet to see a suspension of a major high profile gambling operator, clearly the threat alone provides motivation for early engagement.”
According to Firth, imposing a high financial penalty is not mutually exclusive with licence suspension, and that both could be used in tandem depending on the circumstances.
“Suspension of a licence may be appropriate, for example, where there are concerns about serious ongoing breaches and a period of suspension is deemed necessary to allow the operator to remedy the breaches,” he said.
“In determining the appropriate outcome, the Commission will have regard to its published Statements of Principles – for licencing and regulation and for determining financial penalties – and Indicative Sanctions Guidance. However, the policies are not prescriptive.
“The outcome will be based on an assessment of the risks, the wider circumstances of the case and the range of options available.”
License requirements
In addition to the financial penalty, the Commission will force William Hill to comply with additional licence terms in the future. In the future, a board member will be responsible for overseeing an improvement plan, and a third-party audit will be conducted to verify the effectiveness of the company's safer gambling and AML rules.
These modifications, according to Firth, are "intended to reinforce senior executive responsibility and assess the daily effectiveness of the compliance framework, and will surely assist to improve the compliance function."
Finnerty, on the other hand, claimed that the adjustments are a "practical and effective" means for the Commission to assure continuing supervision of the corporations in question without requiring more resources from the Commission.
She also emphasised the regulator's decision to emphasise the role of technology in recognising gambling problems or criminal risk sooner.
“This should be taken as a signpost for all gambling businesses to consider what technologies they could or should be looking at to strengthen their own systems and controls,” said Finnerty.
Implications of AML
The regulatory payment, according to Michael Ward, executive director of UK source of funds and AML fintech firm Armalytix, exemplifies how the AML picture is developing more broadly.
He contended that many sectors are increasingly accepting that source of funds checks are not at the level required by the new standard.
“What’s toughest for the gambling sector is that there’s no specific guidance, it is more of a principle based system. But then I would also say that most sectors are in a similar situation.”
Ward also emphasised the importance of the link between different industries, because criminal activity might relocate from one industry to another based on the altering competences of AML regimes.
He said that in the future, if other industries tighten their processes, online gambling may face more AML demands.
“But if we talk about it purely from a money laundering standpoint, there’s little doubt in my mind that, not for any fault of their own, online game gambling is going to be increasingly targeted by money laundering.”
By fLEXI tEAM