GC: KYC and Affordability Checks Need Further Improvement

The gambling industry watchdog in the UK outlined further improvements for the areas of Know Your Customer (KYC) and affordability checks are needed, as current efforts from licensees continue to fall short of the regulator’s expectations.

The British Gambling Commission (GC) released its annual Compliance and Enforcement Report, along with the first ever National Strategic Assessment, a comprehensive evaluation of the latest available evidence from a wide range of sources and case studies, aimed at determining the issues and risks from gambling to the public.

Affordability Checks

The GC stressed that despite its emphasis on affordability check triggers as a means to ensure early vulnerability identification in its previous report, it continued to find cases in which operators allowed individuals to continue gambling in cases where there were clear signs of harm, with no affordability check performed.

The Commission cited cases of a customer who deposited and lost £187,000 in two days despite no regular source of income and a customer allowed to lose £18,000 over a year, despite telling staff she lost all her savings and was continuing on borrowed money.

The GC said the average annual salary for a full-time employee in the UK is around £30,500 before tax, while the average management personnel, manager, director or senior official earns less than £45,000, asking operators to have these figures in mind while assessing affordability for clients.

The report was based on data up to March 2020, the GC noted, pointing out that the coronavirus developments made things worse, as 40% of people saw their disposable income fall, while 20% of the population had mental health deterioration, a precondition for excessive gambling.

AML Controls

The GC criticized the level of anti-money laundering processes for gambling operators, as risk assessments were often not up to standards and operators seemed to not learn from past industry mistakes and regulatory enforcement actions.

Going forward, the GC noted it would subject to scrutiny personal management license (PML) holders, as many of them were behind the failings to implement executive decisions fully, due to inadequate efforts, as well as overcomplicating lines of decision making and accountability.

Illegal Gambling

The GC placed particular focus on eradicating illegal gambling, as it continued to exploit customer vulnerability and create difficulties for customers in terms of withdrawing funds. Many of these operators may also take advantage of white label agreements which became more popular recently, without the prior passing of suitability checks with the regulator.

The gambling watchdog reminded operators that they bear the responsibility for their white label partners and should perform thorough due diligence checks on them, or else may face their license being revoked.

In terms of betting exchanges, the GC notified operators it had increased its regulatory activity across the venues, making sure that exchanges apply critical risk-based thinking in advance, before expanding into other betting markets or jurisdictions.