UK LEGAL COMMENT
licensed activities and that it will not grant an application “until it is fully satisfied that the operation will not be financed by the proceeds of crime”. Applicants “will be asked to provide information and evidence as required” as to their source of finance. The reality is that the Commission is already applying these
criteria to licence applications and application for change of corporate control. The necessity of adding these comments to the policy statement at least shows that the Commission recognises that it is not currently clear to applicants and licensees that these points are part of its assessment criteria. What remains unclear is what evidence and information
would “fully satisfy” the Commission that an operation will not be financed by the proceeds of crime. This places operators in a difficult position when considering new investment or a fundraising round, as accepting funds which cannot later be shown to be legitimate to the Commission’s satisfaction places their licence at risk. A useful (some might say essential) addition to the policy
would be for the Commission to explain the nature of evidence required and how many steps funds must be traced to “fully satisfy” it on this point. For example, will the Commission be fully satisfied as long as an operator provides evidence proving where the investor obtained the funds (e.g. an inheritance), or will they also be required to provide further evidence to demonstrate the previous legitimate source of those funds (e.g. where did the deceased obtain the money)? Given that their licence may be at risk, operators should be entitled to some certainty as to what will be required, to enable them to confirm with investors in advance that they are able and willing to provide the necessary evidence.
Compliance assessments, “Special Measures” and licence reviews
The Commission has already been carrying out compliance assessments of remote operator remotely, even before the pandemic hit. It has decided to formalise this in its policy statement, particularly as it now intends to roll this out to some aspects of its assessment of land-based operators as well. The Commission conducts remote compliance assessments on a platform like Teams, Zoom or Skype and expects operators to screen-share to show customer records and documents collected as part of customer due diligence. Operators may understandably have GDPR concerns arising from this and may therefore want to seek advice ahead of the assessment to understand whether there are any limits on what they are able to show to the Commission. Following a compliance assessment, the Commission may decide to take no further action or may decide that further investigation is needed, which may involve or lead to a licence review. It has also, during the last year, been trialling a new process called “Special Measures” which currently has no documented framework. Arguably somewhat late in the day, the Commission proposes to set out details of what this involves in the policy statement. Operators are placed in Special Measures if serious failings
are identified during a compliance assessment, but the Commission does not feel it needs to suspend and/or review
DECEMBER 2021 23
the licence straight away. Operators in Special Measures are invited to submit and agree an action plan designed to rectify the identified failings, which might also include proposals for divestment of benefits gained as a result of the failings.
Once the action plan is completed by the operator, the Commission will carry out a further compliance assessment. Following this it will either lift Special Measures or move on to review the licence. In the majority of cases where Special Measures has been used a licence review has not followed, however one may take place if either the Commission is unhappy with the proposed action plan or does not feel that it has been appropriately implemented. When a licence review does take place, the way it is conducted must follow the Commission’s policy statement. The Commission apparently feels that this is somewhat limiting and proposes to amend the policy to say that it “will take a flexible approach to the procedure to ensure that all relevant facts and matters are investigated”. In particular, the Commission wants to be able to issue a second preliminary findings letter if the licensee’s response to its first preliminary findings letter introduces new evidence or raises further questions. Unfortunately it is unclear from the consultation document whether only one additional preliminary findings letter will be possible, or if this process can continue back and forth ad infinitum. Whilst it is understandable that the Commission needs to investigate the matter thoroughly, this does leave licensees with a potentially lengthy period of uncertainty, as the Commission does have a tendency to find further questions to ask whenever information is provided.
Further consultation topics
The consultation document covers a number of additional topics, ranging from the licensing of products with a financial presentation (such as Football Index) to the basis for regulatory settlements and financial penalties. I would encourage all Commission licensed operators to review it carefully for items which may affect them now or in the future and submit a response where they feel the proposals are wrong, or include insufficient detail or guidance.
Melanie is a gambling regulatory lawyer with 13 years’ experience in the sector. Melanie advises on all aspects of gambling law including licence applications, compliance, advertising, licence reviews and changes of control. She has acted for a wide range of gambling operators including major online and land-based bookmakers and casinos, B2B game and software suppliers and start-ups. She also frequently advises operators of raffles, prize competitions, free draws and social gaming products. Melanie has a particular interest in the use of
new technology for gambling products and novel product ideas.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44
