How did the Treasury allow the bookies to escape money-laundering regulations?
Campaign for Fairer Gambling
The Campaign for Fairer Gambling assesses evidence of gambling related crime and calls for this to be properly taken into account when DCMS decides on stake reduction measures for fixed odds betting terminals (FOBTs) after the general election.
In January 2016, the Gambling Commission produced a non-public draft (obtained by the Campaign) entitled, "Money laundering risk within the British gambling industry" which looked very ominous for the bookies. Coincidently, that month the Gambling Anti-Money Laundering Group (GAMLG) appointed its first Chair, Keith Bristow. GAMLG had recently been formed by the Remote Gambling Association (RGA) and the Association of British Bookmakers (ABB).
The Gambling Commission draft had changed noticeably but still classified betting shops and remote betting as higher risk as in October 2016. In April 2017, GAMLG produced an illustrated report after a Treasury draft announced that betting shops and remote betting sites would be excluded from the 4th EU money laundering directive.
Casinos and remote casinos cannot be excluded but, contrary to the 3rd directive, all gambling providers are included. However, exemptions can be made on the basis that they are "proven low-risk".
The Treasury commented that risk profiles had been reduced by increased staff training, and stringent systems and controls due to the Gambling Commission tightening the Licensing Conditions and Codes of Practice (LCCPs). The Treasury commended the creation of GAMLG, citing it as support to exclude sectors represented by the ABB and the RGA.
The Gambling Commission 2016 draft provided a balanced risk matrix assignment as shown in Figure 1. By comparison, in Figure 2, GAMLG created a biased assignment, increasing the low-risk and decreasing the high-risk designation impacts.
The Gambling Commission identified seven criteria for licensed betting offices (LBOs) with six being high-risk as shown in Figure 3. By comparison, in Figure 4, GAMLG identified 20 betting shop criteria, diluting the seven criteria, with only five being high-risk and 13 being intermediate risk.
However, after GAMLG’s proposed "controls" are in place, as shown in Figure 5, all the high-risk designations disappear, and there are only four intermediate-risks designations. GAMLG even claim that the “controls” have the power to move three criteria from high-risk to low-risk. These relate to runners, staff knowledge and, incredibly, FOBTs.
Runners are persons who are wagering for others. The "others" are usually successful gamblers who bookies won't allow to have a bet, rather than money launderers.
Staff knowledge could help, but how do the staff get the knowledge? As they only get minimal "problem gambling" training and are unqualified to address that, how do they become qualified to address money-laundering?
As for FOBTs - what "controls" have been introduced? Will there be any independent testing of the new "controls"?
As prevention of the association of crime with gambling has been a licensing objective since 2005, why is it only in the face of EU regulations that "controls" mysteriously appear? Why was the Gambling Commission incapable of creating these “controls” within the LCCPs? Or does the Gambling Commission not attribute the same value to the “controls” that GAMLG and Treasury do?
The irony is amazing. The bookies argue against FOBT stake reduction based on the need for "evidence", but they produce tick-the-box illustrations and new "controls" as the basis for "proven low-risk". GAMLG Chair, Keith Bristow, must have incredibly exceptional credibility as ex-Director General of the National Crime Agency.
Is the Treasury unaware that a Birmingham court heard in 2016 that a Cardiff drug-dealer had laundered nearly two million pounds through Ladbrokes? Or that the Gambling Commission has yet to make any public announcement of action taken against Ladbrokes, who had previously been warned about similar failings?
The irony is that while the Treasury ignored Gambling Commission advice that these sectors were high-risk, DCMS will rely on Gambling Commission advice in the current FOBT review. It is to be hoped that DCMS is sharper than the Treasury in dealing with the bookies when the FOBT review resumes after the general election.
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