An assessment by the UK Gambling Commission (UKGC) of its licensees' compliance with anti-money laundering and customer interaction regulations has identified serious failings that could result in five operators losing their licences.
The initial assessment has prompted the regulator to launch investigations into 17 operators, five of which could be subject to a licence review.
"It is vital that the gambling industry takes its duty to protect consumers and keep crime out of gambling seriously," outgoing UKGC chief executive Sarah Harrison said. "The Gambling Commission's new strategy sets out our vision for a fairer and safer gambling market. The action we are taking to examine online casino operators' compliance with money laundering and customer interaction requirements is just one example of how we will be relentless in turning that vision into reality.
"As the online sector continues to grow, and now accounts for a third of the British gambling market, it is right that we maintain a sharp focus on online gambling," she continued. "That is why in addition to our work on compliance among online casino operators, we have also been conducting a wider ranging review of online gambling looking at how the market has evolved and to identify where further action can be taken to make gambling fairer and safer for consumers."
The UKGC said that companies were failing to properly carry out due diligence on customers, as required by licence condition 12.1.1, which is designed to prevent money laundering.
"In our initial assessments we found a lack of evidence of ongoing monitoring of customer accounts ," the Commission explained. "We are concerned that where ongoing monitoring of customer accounts is not proactively undertaken both money laundering and/or social responsibility issues go unreported."
The commission said that it found evidence of staff with no formal anti-money laundering training working as Money Laundering Reporting Officers (MLROs). Some were even found to be unable to properly explain what constitutes money laundering, while there was a "general lack of understanding" of how criminal funds could affect a business.
MLROs were also found to be failing to submit Suspicious Activity Reports (SARs) to the National Crime Agency and Financial Intelligence Unit, meaning potentially illegal transactions were processed and not properly investigated.
With regards to problem gambling, the commission found that some operators were failing to act when customers showed signs of problem gambling, in breach of the social responsibility obligations set out in the terms of the UK licence.
"We reviewed a large number of customer accounts during the assessments and identified potential signs of problem gambling based on consumers’ gambling pattern and spend," the UKGC said. "In many cases however this behaviour did not trigger a customer interaction. Customer account records did not show any evidence of customer interactions taking place and operators were of the view that these customers did not raise any concerns."
The UKGC has urged all companies to review their anti-money laundering and social responsibility controls to ensure they fully comply with the licence terms.