Paddy Power Betfair’s fine shows the gambling industry needs to up its AML game

The consumer and trade press have both been full of the news that the bookmaker Paddy Power Betfair has been fined £2.2m by the UK Gambling Commission (UKGC) for failing to protect customers who showed signs of problem gambling, as well as failing to stop stolen money from being gambled.

According to UKGC, the company “failed to adequately interact with customers who were displaying signs of problem gambling and failed to adequately carry out anti-money laundering checks” as part of its inquiry.

This isn’t the first time that a bookmaker has been penalised in the UK and, unless action is taken now, it certainly won’t be the last.

Searching for adverse information

To operate in the UK, all businesses, including gaming companies, must comply with rigorous anti-money laundering (AML) and “Know Your Customer” (KYC) legislation.

A key part of the regulations is a requirement to regularly search for “adverse information” on new and existing customers. To do this, companies must trawl the so-called “Deep Web”, as well as traditional and digital news media, international corruption watchlists and other such databases, for any data that ties the individual with money laundering or links them with people accused of criminal activity.

In addition, companies must demonstrate that they have carried out these in-depth searches. This means keeping a detailed audit trail and providing regular reporting to regulatory bodies.

Behind the times

In spite of these strict requirements, however, many regulated entities – particularly in the gaming sector – still depend largely on outdated manual searches of Google, supplemented by static databases that do not hold real-time information on people, in order to meet their anti-money laundering obligations.

These outdated processes are slow and inefficient, and often mean that vital information is missed. As a result, the gaming industry is leaving significant gaps in its defences that money launderers – as well as problem gamblers – are able to exploit. Failure to tackle these now could mean bookmakers and other companies are at risk of significant financial penalties, just like Paddy Power Betfair.

The right tools for the job

Understandably, performing KYC checks on every customer is an onerous task for any organisation. Nevertheless, the technology is already available to support gaming companies in meeting due diligence requirements, efficiently and accurately.

Advanced regulatory technology incorporating innovative machine learning (ML) and natural language processing (NLP) technology has been designed specifically to help companies fully automate KYC checks.

Such technology can perform multiple KYC checks simultaneously and search 24 hours a day, seven days a week, enabling it to flag any adverse media to human compliance managers the instant it appears, without delay.

In doing so, this kind of RegTech can go a long way towards helping gaming companies ensure easy onboarding and an enjoyable user experience for customers, while ensuring they are doing their bit to tackle financial crime.

Time to stop gambling with your profits

Bookmakers no longer have an excuse not to do everything they can to comply with AML and related legislation.

The law is clear when it comes to money laundering and problem gambling, and the technology is there to help bookmakers comply. It’s time for everyone in the UK gambling industry to step up and shore up their due diligence. Failing to do so means that they are playing games with their profits and their reputations.

Jane is  focused on delivering Kompli Global’s unique Gold Standard” Compliance Service which fully meets the regulatory requirements and enables clients to take on new business and retain it, confident that they have access to the best available information and expertise to fulfill their compliance obligations.