Eight in ten gambling firms are risking multi-million pound fines for AML failures

Gambling firms are still not meeting their regulatory requirements

The Gambling Commission has handed out £64.3m in fines for anti-money laundering (AML) failures in the past 12 months, yet most gaming and gambling firms are still not meeting their regulatory requirements, according to brand new research from digital compliance experts SmartSearch.

SmartSearch’s new report - EV Uncovered III -Emerging financial sectors – has discovered that just 16% of gaming firms ‘always’ verify the identity of new customers, while just one in five (21%) screen them against sanctions and PEPs lists.

Amongst online betting firms specifically, the findings are even more worrying - just 14% verify the ID of all new customers, and only 12% run sanctions and PEP checks. Overall, 22% of online betting firms do not verify online customers, and of those that do, most (63%) do a document upload without verification – only 29% use an electronic verification partner.

The research also reveals a worrying lack of checks on existing clients too – just 7% of businesses in the gaming sectors are running daily checks on their existing customer base. While half are running checks at least once a week, 44% are leaving anywhere between two or three weeks to over a year between checks.

“These findings are really shocking,” said Martin Cheek, Managing Director at SmartSearch. “Not only is a lack of AML compliance potentially enabling financial crime – our research shows 40% of casinos and 26% of online betting firms have been victim to money laundering in the past year – leaving the business incredibly vulnerable, but there are huge financial and reputational consequences too – as well as the possibly of licences being revoked.

“Our research shows that almost two-thirds (62%) of gaming firms admit to being worried they are committing an AML breach, and rightly so - in the past year alone, the gambling commission has handed out 18 penalties for AML failures, totalling more than £64.3m in fines.

Despite the fact most gambling and gaming firms are not running proper checks, the vast majority – 83% - say they are ‘confident’ none of their existing clients are on a sanctions or PEP list; mostly because they ‘trust’ them (32%) or because they have worked with them for a long time (45%).

“Misguided trust, and a feeling of ‘this isn’t my problem’ are major issues – in fact 36% of gaming firms say they don’t screen their clients because they ‘are not in a sector that is affected’. Firms think they know their customers, or trust them, so don’t need to bother which is both incredibly naive and dangerous. Even if their clients are trustworthy, what’s to say they themselves have not had their identity stolen, or been duped into cleaning cash?”

Half of gaming firms are still doing manual ID checks

SmartSearch’s report has not only uncovered a lack of AML compliance within the gaming sector, but also a worrying reliance on outdated and inaccurate manual processes.

More than half (52%) of the gaming firms surveyed for SmartSearch’s EV Uncovered III -Emerging financial sectors report still rely completely on manual checks (42%) or a mixture of manual and electronic checks (10%). More than a third (36%) say they run manual checks because ‘they always have done’ and 34% are under the misguided understanding that using hard copy ID documents is the only way to truly guarantee a person’s ID.

Martin Cheek, Managing Director continued: “The fact so many casinos, betting shops and online betting companies still relying on hard copy documents to verify ID is really concerning, especially when so many believe it is the only way to run a proper ID check.

“The only way to be confident you have accurately verified an individual is to run an electronic check – preferably through an expert third-party provider.

“Our innovative cloud-based verification platform is a triple-bureau (uses all three leading global credit reference agencies) solution that also utilises biometric technology and enhanced due diligence capacities to remove false positives, making our pass and check rate the highest on the market.

“It also hosts the results of every check and then monitors them for any changes. This ensures our clients meet their requirements in relation to initial verification checks – including screening and enhanced due diligence when needed – ongoing monitoring and hosting, all from one place.

If you are not yet a SmartSearch customer, contact us today to find out how our easy-to-use electronic verification platform can help you get compliant and stay compliant, saving you time, money and an awful lot of stress.