Live and Learn: GB Commission's Stiff Anti Money Laundering Penalties on Smarkets Reminds All of Full Scope of Operator Accountability

Operator Smarkets has taken a hit from the GB Gambling Commission for insufficient financial background checks.

The Fine 

A new fine of £630,000 imposed by the Great Britain Gambling Commission on Smarkets for AML and social responsibility failings in UK market operations is a stark reminder of the accountability of operators for ensuring the money they take is clean as a whistle.

The Main Violation 

Culminating in a six-figure sum being deposited on the Smarket site for play without appropriate checks.

Repeated Errors

This was the latest in a series of Smarkets customer deposits accepted that lacked sufficient source-of-funds checks brought about by Smarkets' failure to identify and interact with customers.

Other Violations

Specific violations published by the Commission start with Smarkets accepting a total of £395,000 over four months without an appropriate source of funds checks—a legal responsibility which falls to Smarkets or any respective site operator.

Movement of Unauthorised Funds 

Another violation identified by the Commission includes transfers by one registrant user of significant levels of funds between accounts within the Smarkets site sans further procedural source-of-funds checks.

Codes Violated

Smarkets' anti-money laundering neglect primarily violated licence condition 12.1.1. GB additionally dropped the hammer for further Smarkets breaches of both social responsibility code of practice (SRCP) 3.4.1 for customer interaction and ordinary code provision 2.1.2 for additional money laundering.

Further Penalties

GB also added a warning and subsequent audit to monitor and ensure effective compliance to all prevailing anti-money laundering and social responsibility policies, procedures, and controls, as laid out in the 2005 UK Gambling Act's section 117(1)(b).

GB Spokesperson Comments

Commission deputy chief executive Sarah Gardner said violations identified in the commission's compliance checks in the Smarkets case remind all operators “how we will take action against gambling operators who fail their customers.”

Protecting Users

Gardner further emphasized customer protection in the commission's enforcement:

“It was obvious that poor systems and processes were in place which contributed to these breaches, driven by the company’s failure to effectively implement its policies and controls.”

Smarkets Response

Smarkets founder and chief executive Jason Trost issued an organisational statement to the commission saying his business fully accepted the ruling while committing to work with the regulator to further improve its processes.

Outlook

Coupled with another £1.3m fine the commission handed down to major operator LeoVegas last week, these fines indicate that any unchecked money adds up in penalisable violations proportionally to the activity of those funds on operator sites. Further, whether the funds have actually been laundered or not is irrelevant if the anti money-laundering procedures are violated.