UKGC Issues Warnings Over Third-Party Responsibilities

The UK Gambling Commission (UKGC ) has issued a notice that if third-party websites for which they are responsible are not properly controlled, businesses will face some regulatory action.

The notice follows action taken against FSB Technology, which is fined £600,000 for violations in advertising, money laundering and social responsibility as well as having to improve the way it works under new terms of licence.

The problem came to light initially last year as a result of the white label regulations of the company, a business model that the UKGC stresses ‘places responsibility on the licensee to ensure that its third-party partners keep gambling fair, safe and crime free.’

A UKGC report found that, between January 2017 and August 2019, FSB did not have adequate supervision of three third party websites or clear anti-money money laundering and social responsibility policies and procedures in place. Highlighted with four concrete examples:

  • Ineffective customer interactions with, and source of funds checks on, a customer who displayed indicators of problem gambling and spent £282,000 over an 18-month period.
  • Sending a marketing email to 2,324 customers who had previously self-excluded.
  • A VIP team manager acting without adequate oversight and not receiving sufficient AML training.
  • Placement of an inappropriate banner advertisement containing cartoon nudity on a Great Britain facing website which was providing unauthorised access to copyrighted content.

Richard Watson, Commission executive director, commented: “All operators should pay close attention to this case as it shows that we hold all licensees fully responsible for third party relationships – and we will act against any of our licensees that do not manage third parties appropriately.

“These were blatant breaches of rules we have put in place to ensure gambling is fair, safe and crime-free.”

Besides charging £600,000 to execute the National strategy to Reduce Gambling Harms, FSB will also have additional restrictions on its licence to ensure that it performs risk-based due diligence on behalf of prospective and existing third-party clients it operates websites.

The Commission continues to investigate the conduct of the owners of personal management licences involved in this case.

A FSB statement said in response: “FSB has reached a settlement with the UK Gambling Commission after an investigation by the regulator identified areas where compliance did not meet regulatory standards.

“Following the investigation, FSB implemented a series of significant improvements to AML, customer interactions, safer gambling and due diligence processes. As a result of these changes, FSB is able to meet the high standards set by the UK Gambling Commission across all areas of the business.”