In-Depth Legal & Regulatory 25 March 2022
Questions and answers from experts: What actions should operators take to combat Russian sanctions
Gambling Insider
Following Russia’s invasion of Ukraine in February, sanctions were imposed by the UK on numerous Russian individuals and entities. The situation is becoming more complicated as more people are added to the list. This means that businesses who have exposure to this region will need to be vigilant.
Shortly after the conflict began, the Gambling Commission issued a reminder that operators must, “apply a risk-based approach in any third-party or business relationships they conduct, or customer relationships which are associated with Russia and any of the sanctioned individuals, banks or entities named.”
David Inzani, Associate Solicitor at Poppleston Allen, explains what’s expected of operators in the current environment and provides some advice on staying on the right side of both government legislation and the regulator.
What are gambling operators’ main responsibilities in terms of complying with government sanctions and how do they differ from the obligations placed on companies in other industries?
Every business must comply with all applicable legislation. In this instance, it is the Sanctions and Anti-Money Laundering Act 2018 that applies. Gambling operators have to adhere to the Gambling Commission’s Licence Conditions and Codes of Practice.
This could lead to them not only being in contravention of the law but possibly also of their gambling licence. If their license is suspended for a violation, they could face enforcement actions by the Gambling Commission.
Which are the most important requirements for the LCCP?
The LCCP requires gambling operators to perform a risk assessment to determine if their business is being used for terrorist financing or money laundering.
The risk assessment and policies, procedures and controls have to be reviewed on an ongoing basis – they must be reviewed at least once annually, but also in the event of any change in circumstance. A change of circumstance could be a new product or technology, or even a different payment method. The war in Ukraine, however, is another example of a change in circumstances.
How do you expect to respond in fast-moving situations like the one we are currently facing, when people are regularly added to sanction lists?
The government continues to amend primary legislation, adding new sanctions and anti money laundering regulations. This applies to Russia as well as all other companies. Recently, additional Russian products and businesses were added to the sanction list. It can sometimes be hard for businesses to keep up with changes at the speed they occur, but it is a legal requirement.
Operators should exercise enhanced diligence prior to interacting or attempting to deal with any potential business partners or customers if there are suspicions that they may be connected to a sanctioned organization. Operators should also screen their existing business and customer relationships in order to stop transactions from being made or to freeze any assets that may be sourced from sanctioned sources.
What would you expect of an operator if they were in violation of sanctions?
The licensee would need to notify the Office of Financial Sanctions Implementation. They also have the obligation to inform the Gambling Commission of the key event. This should be completed as quickly as possible but at most within 5 working days after the licensee becomes aware.
How likely are these consequences?
A violation of licence conditions can be a crime. The Gambling Commission, however, has regulatory powers and not criminal ones when it investigates violations of conditions. The Gambling Commission would examine the operating license and investigate the failure. This usually involves interviewing the operators and reviewing all policies, procedures, and management controls. It would then have the power to take action – it could give the operator a warning, it could put conditions on the operating licence, issue unlimited fines or, in the worst cases, it could revoke an operator’s licence.
There is no one-size-fits-all solution to preventing money laundering and it isn’t something operators can automate; generic risk assessments and policies just aren’t going to cut itDavid Inzani
The degree of severity of any violation of conditions would affect the Commission’s enforcement level and the actions it takes. When determining whether a penalty should be imposed, the Commission will take into consideration certain factors. These include the nature of the licensee as well as whether or not the licensee was aware. If an operator’s risk assessment and policies and procedures for money laundering and terrorist financing are strong and regularly reviewed, this reduces the risk of a breach.
If a breach does occur, if an operator can demonstrate that it has been diligent and the possibility of a breach would not have been likely, then this can help mitigate the extent of any enforcement action by the Commission. It’s worth noting that we have seen the Commission impose some pretty significant fines on gambling operators for money laundering failings in recent years.
Yes. We continue to see large operators being fined in this area. Why are some operators still doing it wrong?
A lot can be expected from the gambling industry. Because it is so regulated, it’s a major task for operators to comply with AML regulations. Although it can be challenging, they still have to do it. There is no one-size-fits-all solution to preventing money laundering and it isn’t something operators can automate; generic risk assessments and policies just aren’t going to cut it. Preventing money laundering requires constant diligence, as the current geopolitical environment demonstrates.
Wynn CEO excited by Macau Wynn Resorts’ recently appointed CEO, Craig Billings, has said he is “most excited and fascinated by Macau,” in his bid to revolutionise Wynn and…
Slot Focus
Slot Focus
Slot Focus
Sustainability progress accelerates Entain has published its annual report, detailing the operator’s ongoing sustainability efforts. Entain took a proactive approach to its corporate social responsibility (CSR) last year.