888 to pay £2.9m after Gibraltar GC uncovers KYC and EDD shortcomings

Image: Shutterstock

A subsidiary of 888, Virtual Global Digital Services, is to pay £2.9m after the Gibraltar Gambling Commissioner carried out an internal review into historical anti money laundering and terrorist financing.

The settlement consists of the aforementioned sanction being payable to the Consolidated Fund in lieu of any financial sanction that may have been imposed under the Supervisory Bodies (Powers Etc.) Regulations 2017.

In January, a review was sanctioned after 888 announced a suspension of VIP activities pending the outcome of an internal compliance investigation.

The gambling group said that it had come to light that certain best practices have not been followed in regard to KYC and AML processes for VIP customers in certain .com markets, with the Middle East region specifically named.

In April 2023, 888 concluded its own investigation, with no further impacts expected. The company’s board noted an expectation to recover 40 per cent to 50 per cent of revenue, resulting in a £25-30m revenue headwind for FY23.

Following a Gibraltar GC investigation, a number of weaknesses were said to have been uncovered, which include an inconsistent approach with regards to keeping accounts open with restrictions as opposed to closing accounts.

Controls in relation to KYC obligations were found to be ineffective, with it said that “there was an historical overreliance on high thresholds for enhanced due diligence intervention and a lack of clarity in the threshold approach”.

A lack of consistency in the effectiveness of EDD checks found that these were not conducted quickly enough and identified as weak in certain circumstances, with failures in identifying “the suspicious nature of a very limited number of accounts at the earliest opportunity” also uncovered.

A further shortcoming concerned a perceived inconsistent approach with regards to keeping accounts open with restrictions as opposed to closing accounts, with 888 also found to have placed an overreliance on open-source checks

Furthermore, a failure to ask customers to provide the necessary source of funds and source of wealth documentation, at the appropriate time, was discovered in a number of cases.

Mitigating factors identified by the GGC include 888 management self-declaring the issues, suspension of accounts with immediate effect that resulted in “significant revenue loss”, a board commitment to rectify matters and immediate implementation of an internal compliance review.

Part of the settlement will be made available for use by the Centre of Excellence for Responsible Gaming at the University of Gibraltar to further work in the area of gambling disorder and effective prevention and treatment. 

“For the avoidance of doubt no specific cases were identified which involved 888 dealing with the proceeds of crime or terrorist financing,” a Gibraltar Gambling Commissioner statement read.

Adding: “Gibraltar licensees are expected to factor the learnings from this case into their own risk assessments, systems and controls. 888 continues to be considered a fit and proper entity to hold licences in Gibraltar. 

“888 has enhanced its policies and procedures in remediating the identified historical deficiencies. The Gambling Commissioner and Licensing Authority consider this matter closed and will be making no further comment on this matter.”