The Commission began its regulatory review of MrQ after it made a compliance assessment in September 2022.
The review found failings in the online bingo and igaming operator’s processes for stopping money laundering and protecting people from being harmed by gambling.
It also found that Lindar Media had breached several of its Licence Conditions and Codes of Practice (LCCP). These ranged from AML to social responsibility failings.
The Commission said that, based on these failures and considering the operator’s actions since the assessment, it had agreed a £690,947 regulatory settlement with Lindar Media. This money will be directed to social responsible causes.
Findings of the compliance assessment
The GC outlined the specific failings it had found in Lindar Media’s compliance assessment. These included weaknesses in its implementation of AML policies, procedures and controls.
The regulator also discovered shortcomings in its responsible gambling policies, procedures, controls and practices. It highlighted failures that extended to its reporting as to when key events took place.
Other deficiencies included Lindar’s head of regulatory compliance taking additional management posts without Commission approval.
The operator also did not advertise its products in a socially responsible way. Finally, it failed to make its required research, prevention and treatment contributions to an organisation supporting those harmed by gambling.
“You win some, you lose some”
Responding to the regulatory settlement, Lindar Media said that the breaches happened during a time of growth for the business and that safer gambling policies had been improved since the time of the failures.
“My focus since 2022 has been centred around maturing the day-to-day operations through the development of the senior leadership team,” said Lindar Media chief executive Savvas Fellas.
“We’ve implemented scalable processes that provide consistency as we grow and built technology-driven models that underpin compliance and safer gambling promises to our players; all of which are aligned with our mission of offering progressive, value entertainment – with delight and transparency,” he added.
Money laundering and terrorist financing failures
Licence condition 12.1.1(1) says licence holders must assess their money laundering and terrorist financing (ML and TF) risk.
The Commission said MrQ failed to have an appropriate assessment for these risks. This was because it did not assess risk relating to customers, their means of payment, or additional inherent and emerging risks.
The ML and TF assessment also did not address key risk factors. These include customers associating with higher risk countries, along with a disproportionate spend relative to their wealth and business arrangements taking place in unusual circumstances.
Other risks not accounted for related to a customer being the beneficiary of a life insurance policy as well as when a customer is a foreign national applying for residence in return for transfers of capital.
The Commission also said Lindar breached licence condition 12.1.1(2) which outlines the operator’s responsibility for putting in place ML and TF controls.
Lindar failed to have appropriate measures in place. This included the company’s practice of automatically assigning a “low” level of ML risk to new customers.
The Commission said that, at this point, there would be not enough information to give them a rating. It assessed there was an over-reliance on financial triggers to identify and maintain ML risks.
The Commission also noted that financial thresholds for ML were too high, thereby allowing customers to deposit and lose more than £10,000. The regulator said this “did not appear to be sufficiently risk-based”.
MrQ’s social responsibility breaches
MrQ’s licence condition 15.2.1(4) makes clear licensees must notify the Commission within five working days after a key event takes place.
The operator did not inform the Commission promptly when its head of regulatory compliance left the position in June 2022. As such, the regulator found that the business was in breach of the licence condition between 20 June and September 2022.
The online bingo business also failed to comply with paragraphs 1a, 1b and 2 of the Social Responsibility Codes of Practice 3.4.1 (Customer Interaction).
These rules outline how licensees must interact with customers in a manner that minimise the risk of customers experiencing harms associated with gambling.
Lindar Media failed to identify customers at risk of experiencing gambling harms. Its financial and safer gambling triggers “were not always effective”, especially when dealing with customers depositing at a high velocity.
Disproportionate spend relative to personal circumstances was not considered until large amounts of money had been lost. When MrQ did consider personal circumstances, it did so using County Court judgements and bankruptcy data which was not always effective.
MrQ’s advertising failures
The Commission criticised the company for allowing its agents to use cartoon imagery to advertise the business. This is because of its appeal to children.
Cartoon characters portrayed in the adverts included Spiderman, King Kong, Piggy Bank Bills and The Doghouse Megaways. The Commission did note that when Lindar became aware of the ads, it had removed them.
The Gambling Commission has imposed several penalties during 2023 so far. These included, in May, a £305,150 penalty on SkillOnNet for AML and social responsibility failings.
Unibet-operator Kindred paid £7.1m in March. The same month, the largest regulatory action ever made by the Commission was imposed on William Hill for a series of breaches. The company paid £19.2m.
Original article: https://igamingbusiness.com/legal-compliance/compliance/commission-mr-q-penalty/
