The United Kingdom Gambling Commission (UKGC) has fined online gaming operator Paddy Power Betfair (PPB) £2.2 million for allowing problem gamblers to play and for failure to adhere to anti-money laundering regulations.

They Stole From Puppies

The Commission found that in 2016, two of Paddy Power Betfair’s customers gambled “significant sums” of money on PPB’s betting exchange (essentially a sports book), which isn’t normally an issue, except for the small detail that the money they used was stolen. One of the customers stole the money from his employer, which was, of all things, a charity.

That charity was the Birmingham Dogs Home, a shelter for lost, abandoned, and abused dogs. Simon Price, the former head of the charity, embezzled nearly £900,000 from the organization with his wife, Alayna Warner. Most of it was gambled at lost on Paddy Power Betfair. Price was sentenced to five years in prison, while Warner was given a two year suspended sentence.

Where PPB was found at fault was that it did not conduct the proper checks on the source of the deposits. An operator wouldn’t necessarily do this if you or I gambled, as most of us aren’t depositing much and only playing for low stakes. But if someone is depositing unusually large sums of money and making large bets, operators need to go through proper anti-money laundering procedures.

Problem Gamblers Slipped Through

Also that year, PPB allowed three problem gamblers to play on the site, the result of not conducting proper “source of wealth and social responsibility checks.”

Again, if someone like me played on a site, betting a few bucks at a time, an operator isn’t often going to worry about it (though it might ask for proof of identity for the first cashout). But if I suddenly deposit a ghastly amount of money and start betting like a whale (preferably before I place any bets), an operator needs to talk to me, verify where that money came from, and make sure I can afford it.

Richard Watson, Gambling Commission Executive Director, said:

As a result of Paddy Power Betfair’s failings significant amounts of stolen money flowed through their exchange and this is simply not acceptable. Operators have a duty to all of their customers to seek to prevent the proceeds of crime from being used in gambling.

These failings all stem from one simple principle – operators must know their customer. If they know their customer and ask the right questions then they place themselves in a strong position to meet their anti-money laundering and social responsibility obligations.

Paddy Power Betfair has accepted the findings and punishment. The penalty is broken down as follows, per the Commission’s report:

• £498,508 divestment of the monies received
• £1,717,121 payment in lieu of a financial penalty, which we would otherwise impose for breaches of a licence condition in accordance with our Statement of principles for determining financial penalties. We will direct this money to work which accelerates delivery of the National Responsible Gambling Strategy
• Payment of £50,045 towards our investigative costs.

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