KOMPLI-GLOBAL QA & Paying the price
Jane Jee, CEO of Kompli-Global and Martin Pashley, Director and
Chief Commercial Officer of Kompli- Global, look at the ramifications of recent non-compliance fines.
For far too long compliance has been seen as a tick box exercise and a lot of operators
“
have performed the bare minimum to tick those boxes
”
What is your view on recent fines that have been meted out to gaming companies for non- compliance with AML regulations? What effect will this have on the wider online gambling industry?
The Gambling Commission wrote a letter to remote casino gambling operators earlier this year. It warned the industry that the fine of a high-profile operator was inevitable because the KYC and AML controls of the operators are inadequate. Verification of name, date of birth and address is really all that is needed to open an account. Gambling is a high-risk industry from an AML perspective and, as such, the controls and policies should be more robust and more stringent. The industry needs to take compliance more seriously.
In terms of industry compliance, do you think it’s fair to assume that we could see more gaming companies being investigated and that there could be similar instances at other operators? Definitely. The only surprise is that fines of this nature have not been levied before. Many more operators will be fined by the Gambling Commission and the fines will increase, in the hope that this will force other operators to rethink their policy and refine their controls.
The UKGC found ‘systematic failings’ with anti-money laundering and customer protection procedures within a number of gaming companies. Why do gaming operators seemingly struggle with compliance issues? Gaming operators still see compliance as a hindrance, just another obstacle that they need to get around or that stops them from making money. For far too long, compliance has been seen as a tick box exercise and a lot of operators have performed the bare minimum to tick those boxes. Gaming
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operators are in the business of making money. Compliance is a department within an organisation that makes no money. Therefore, compliance may be seen purely as a cost. Running a compliance department is an expense and it may deter potential customers. On the other hand, compliance could and should be seen as an investment; like insurance it serves to protect the business in that good compliance prevents fines and reputational damage.
What fundamentals do you think operators are getting wrong in terms of ensuring compliance and preventing money laundering? Compiling KYC player profiles – in particular verifying a client’s source of funds – was virtually non-existent in the gambling industry five years ago. So operators are still finding their feet – the operators’ mindset is still rule-based not risk-based – they have not grasped the concept that they should be avoiding the abuse of their company – they are hung up on verification of identity and age rather than the principles behind the legislation. In industries such as law and finance, KYC is embedded in the account opening process and, therefore, all checks are conducted before a business relationship is established and refreshed periodically. The vast majority of gambling firms operate a system that only alerts management that further due diligence must be conducted once a spend threshold has been breached or a spend pattern has been identified. A large number of customers breach operators’
internal thresholds every day and the manpower deployed on monitoring thresholds is most likely inadequate. A gaming company can attract millions of customers from around the world, employing thousands of people. However, only a minimal number of employees will be charged with the task of reviewing player profiles and conducting the
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