LEXISNEXIS The house won’t always win


Michael Harris, Director of Financial Crime and Reputational Risk at LexisNexis Risk Solutions, explains why the gambling industry needs to wake up to its money laundering problem.


T


he UK is currently facing a serious money laundering problem, with criminals becoming savvier and more efficient in their use of technology. As a result, the National Crime Agency (NCA) currently estimates that over £100bn of illicit funds are laundered in the UK every year. Money launderers have long targeted various professional industries and have caused the financial services industry in particular to dedicate billions annually to its anti-money laundering (AML) measures. However, a new report from LexisNexis Risk Solutions has revealed concerns that criminals are increasingly targeting the UK gambling industry to launder their money, with one in three (33.3%) AML professionals saying that this sector now faces the greatest risk of money laundering, Based on research conducted by The Economist Intelligence Unit, On The Frontline: The UK’s Fight Against Money Laundering surveyed over 200 senior compliance, financial and legal experts with AML responsibilities about the current state of money laundering in the UK, with 51 respondents from the gambling sector. With a specific focus on AML measures, respondents were asked about how defences can be tightened, and a more proactive stance adopted, in the face of financial criminality.


There are several reasons why the gambling sector can be considered a money laundering target, particularly for online operators. By using online gaming sites, criminals can quickly gamble and therefore ‘clean’ dirty money gained from illegal activities. Moreover, unlike


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On any given weekend, for instance, a sportsbook may process hundreds of thousands of bets on premier league football matches. In a market like this, it is much easier for criminals to use a larger number of smaller sized transactions to launder their funds, which is more difficult for AML measures to detect.


The National Crime Agency currently estimates that over £100bn of illicit funds are laundered in the UK every year


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AML REGS: COMPLIANT BUT COMPLACENT?


The culpability around this issue doesn’t just rest with the criminals though. A recent report by the Gambling Commission revealed a culture of complacency in parts of the industry, an issue that was also identified by 40% of gambling compliance professionals in the LexisNexis Risk Solutions research. Although the


criminals are the ones breaking the law, market participants are also being held accountable for this activity. In the past year alone, the Gambling Commission issued a record £19.6m in fines following AML breaches.


Regulated gambling companies will already have AML measures in place as part of their security infrastructure, as these are legally required under modern gaming regulations. However, there are still concerns that these processes are not enough, and that the industry is allowing itself to fall behind by not going above-and-beyond these minimum requirements. To this end, the LexisNexis Risk Solutions report found that nearly 40% of respondents viewed current AML regulations as ‘somewhat effective’, with only 41% regarding them as proportionate.


Critics have argued that AML regulations need to be reviewed and improved in a bid to stop criminals in their tracks. The data supports this assumption, as even though over £100bn is reportedly laundered through the UK every year, only £2.2bn has been recovered since 2003 under the Proceeds of Crime Act. The Gambling Commission has promised further ‘draconian’ punishments for companies not doing enough when it comes to stopping money laundering, but what can the industry do to improve the standard of AML procedures and create a stronger defence against criminality?


RECOGNISING THE BIGGER (£100BN) PICTURE


Greater awareness of the scale and severity of the issue is an important first step and could help to counteract the complacency that is currently making the job easier for criminals. Understanding the seriousness of money laundering, and the repercussions of falling short when it comes to AML,


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