Betfred to pay £322k for AML failings

Betfred has been forced to pay £322,000 by the UK Gambling Commission after an investigation found the bookmaker failed to carry out adequate source of funds checks on a customer who lost £140,000 in stolen money.

The investigation found a customer who had been convicted of a £2m fraud had deposited £210,000 in November 2017 via Betfred’s online arm, licensed as Petfre (Gibraltar) Limited.

The customer opened multiple gambling accounts and spent stolen money via numerous online gambling operators, including Betfred, through which they lost £140,000 during a 12-day period.

The Gambling Commission said the case revealed significant failings in the effectiveness of Betfred’s anti-money laundering (AML) policies and procedures, with Betfred required to pay £182,000 in lieu of a financial penalty.

Betfred has also divested itself of the gross gambling yield of the £140,000 lost by the customer, which will be returned to the victim whose money was stolen, and will also pay £15,168 towards the regulator’s investigative costs.

The UK bookmaker said it accepted the findings of the investigation and has since made improvements to its AML procedures to ensure similar failings are not repeated in the future.

According to Betfred’s latest filings on Companies House, the Warrington-headquartered operator recorded £727.6m in turnover for the 12 months ended 30 September 2018, up from £634.5m the previous year.

Gross profit during the 12-month period was £573m while EBITDA before operational exceptional costs was £119.4m.

David Clifton director of Clifton Davies Consultants, believes the customers high activity should have raised alarm bells at Betfred.

“Betfred seem to have heard those bells ringing because they twice requested source of funds information, but then seemingly did nothing when the customer failed to provide it.

“This certainly highlights the need not only for effective EDD in such circumstances but also for effective customer interactions – a subject that will take on even greater importance when the updated LCCP requirements in this respect come into force at the end of this month,” Clifton added.

Peter Murray, head of gaming at Alexem Services, said the licence failings would seem to reinforce the “critical importance” of enhanced KYC procedures.

Murray highlighted source of funds requests as a particularly troubling area for operators, but asserted Betfred should have frozen the account after a lack of response by the customer.

Despite this he believes these gaps may have been plugged by Betfred in the intervening two-year period.

“However we still see this all too often, even today, and it is indefensible in an age where data and technology can add so much to the compliance process especially in the area of multiple account openings, EDD, customer engagement and effective interventions,” Murray added.