FSB Technology, a London-based gaming technology provider, got hit hard by the UK Gambling Commission (UKGC) on Wednesday. Citing “advertising, money laundering and social responsibility failings,” the UKGC fined FSB £600,000 and is requiring that company fundamentally changes its operations to meet the Commission’s regulations.
It was found that between January 2017 and August 2019, FSB Technology did not conduct proper oversight of its licensees. Though its third-party licensees certainly need to have their own systems in place and operate their businesses responsibly, but regulations also state that FBS, as the licensee, is responsible for its clients’ actions.
Know your customer
When it comes to money laundering, the UKGC is not saying that FSB or its third-party licensees actually committed a crime, but rather did not ensure that controls were in place to prevent such a crime.
Examples given the UKGC’s report are as follows (SOF means “source of funds” and AML means “anti-money laundering):
Customer A had during an 18-month period gambled and lost circa £282,000 without providing adequate SOF. FSB terminated the relationship with the customer following our initial compliance assessment and its post assessment internal review established Customer A had not provided adequate documentation supporting the level of her spend.
Third party website A was allowed to operate without sufficient oversight of VIP (very important person) arrangements. A VIP team manager located within the third-party website acted without adequate oversight and had not received sufficient AML training.
The advertising violation had to do with a banner ad. A licensee, referred to as Website B, placed an ad containing “cartoon nudity” on a Great Britain-facing site “which seemingly was providing unauthorised access to copyrighted content.”
Know when to stop…e-mailing
Social responsibility is mainly about problem gambling policies. One of FSB’s clients sent a marketing e-mail to over 2,000 customers who had implemented the self-exclusion feature on the site, meaning that they self-banned. FSB notified the UKGC and sent an apology to the customers.
FSB said that even if the customers had responded to the e-mail (presumably by clicking a link), they would not have been able to gamble because they had self-excluded. Of course, potentially tempting someone who has gambling issues is not a good thing.
The UKGC did have an amusing response to FSB’s apology e-mail: “In addition, whilst we acknowledge FSB’s motivation in sending the apology to the self-excluded customers, we would not have expected this further contact email to have been sent to self-excluded customers.”
Meaning: “Stop e-mailing self-excluded customers. We don’t care why.”
The UKGC says that FSB Technology:
• must, before entering a relationship with a third-party partner, conduct risk-based due diligence with a view to mitigate risk to the Licensing Objectives.
• must manage and evaluate its existing third-party partner relationships.
• must carry out risked-based due diligence on all its third-party partners at least annually to ensure they do not pose a risk to the Licensing Objectives.
The £600,000 fine will not go to the UKGC, but rather the National Strategy to Reduce Gambling Harms. FSB does have to pay the UKGC £34,300 to cover the costs of the investigation.
