Betfred Slapped with £800,000 Fine by UKGC as Global Money-Laundering Crackdown Continues

Among the more interesting news-y tales to emerge in recent days is the £800,000 fine levied against Betfred for the company’s admitted failure to properly investigate the source of money for a well-heeled punter who authorities later discovered to have embezzled over £850,000 from his employers over a 13-month period.

The investigation into the embezzlement done by West Yorkshire bank accountant and losing punter John Stevens determined that he had stolen £856,703.80 from his place of employment, the vast majority of which he had wagered away on Betfred between 2013 and 2015.  Stevens was convicted earlier this year on embezzlement counts, and is currently serving a three-year, four-month visitation to the pokey.

But what the investigation also showed is that Betfred had willingly ignored doing any real KYC (“Know Your Customer”) diligence into the source of Stevens’ funds.  Stevens was loosely categorized as being a “top 5%” punter on Betfred, which should have triggered some sort of background check.  Instead, Stevens, categorized as a VIP bettor, was given plenty of perks and incentives to keep on wagering far and above his legitimate means.

Following both the criminal and separate United Kingdom Gambling Commission [UKGC] investigations, Betfree voluntarily admitted that the company had breached anti-money-laundering and social-responsibility mandates, and was ultimately fined a total of £817,740 (over a million euros, or about US $1.1 million), including investigative costs.

The official settlement agreed to by Betfred included the UKGC’s declaration which found that Betfred:

• Did not adhere to the Money Laundering Regulations 2007;
• Did not put into effect adequate policies and procedures intended to promote socially responsible gambling;
• Did not put into effect adequate policies and procedures for customer interaction with specific provision for customers designated as ‘high value’, ‘VIP’ or equivalent.

The specifics of the settlement:

• Betfred agrees to make payment of £787,500, with £443,000 to be paid to the victims of criminal activities and the remainder, which constitutes a sum in lieu of a financial penalty that might otherwise have been imposed by the Commission, to be spent on socially responsible causes as agreed with the Commission;
• Betfred will pay the Commission’s costs of the investigation, amounting to £30,240;
• Betfred will arrange for an independent third party review and audit of its anti-money laundering and social responsibility policies and procedures to include customer due diligence, enhanced due diligence and on-going monitoring practices;
• Betfred will review and update its anti-money laundering and social responsibility policies and procedures to reflect the findings of the Commission and will incorporate into them any further recommendations made by the independent third party following its review and audit;
• Betfred agrees to the Commission making this public statement reflecting the findings and outcomes of the investigation in order to draw the issues to the attention of the wider industry and provide an opportunity for others to improve.

The gambling industry should be on notice that the issues identified in this statement are
likely to form the basis for future Commission compliance activity and should consider
them in light of their own operating processes and procedures.

“We identified a number of weaknesses in the anti-money laundering and social responsibility controls used by Betfred. The penalty package of over £800,000 reflects these failures,” said Richard Watson, Programme Director at the UKGC.”

Added Watson, “The Commission has now concluded a wide range of cases over the last 10 months leading to around £3.75 million in penalty packages. The outcomes and findings in these cases provide a clear signal to operators of the need to learn the lessons from these for social responsibility and money laundering controls, or risk facing tougher sanctions.”

Among the other companies dinged by the UKGC in recent episodes are Paddy Power, Rank Group, and Gala Coral.  Gala Coral, now part of the Ladbrokes Coral conglomerate, was dinged by the UKGC for some £880,000, connected to a different but similar laundering-of-embezzled-funds case.

The push to force gambling firms to know the sources of the money their whales bring isn’t just confined to the UK, either, Over on the west side of the Atlantic pond, both Las Vegas Sands Corp. (Venetian / Palazzo) and Caesars Entertainment have both run into similar regulatory problems, with resultant fines, for like failures to determine that sources of gambling funds are legit.

Expect this type of regulatory enforcement to increase in the coming years, particularly when it comes to a certain category of elite customer for whom casinos, worldwide, have often ignored the rules.  Those days, indeed, are slowly fading away.