The regulatory breaches were discovered during a Commission-led investigation of activity between October 2019 and February 2022. Videoslots, which operates Videoslots.com, Videoslots.co.uk and Mrvegas.com, will pay the money as part of a settlement with the regulator.
Analysing its findings, the Commission identified several social responsibility failures. These included not ensuring customers displaying risk behaviours were identified as potentially experiencing harm. This was because responsible gambling reviews were not undertaken as early, or as well, as they should have been.
Videoslots also failed to identify whether a customer was at risk of harm. This was because Videoslots did not consider whether the amount being deposited or lost was appropriate. The Commission also noted how customers showing indicators of harm continued to gamble significant amounts.
AML failures included how Videoslots did not implement its risk-based processes appropriately due to delays in conducting the required action.
Videoslots also failed to fulfill elements of customer due diligence as early as intended, in accordance with its own risk-based approach. In addition, the regulator said the operator did not have sufficient AML analysts to process data or undertake AML account reviews.
AML breaches
Breaking down specific breaches, the Commission flagged licence condition 12.1.1(3). This requires licensees to ensure policies, procedures and controls are implemented and kept under review.
Videoslots accepted it breached this licence condition between March 2021 and April 2022.
Failings identified here included how Videoslots did not implement its risk-based processes appropriately. This was due to significant delays in conducting the required action. In one case, a player hit several AML triggers and was able to deposit £112,225, without Videoslots taking the correct action.
Videoslots was also ruled to have not fulfilled elements of customer due diligence as early as intended in accordance with its risk-based approach. There were examples where analysts did not properly implement AML policies, which allowed some high-risk users to continue to gamble significant amounts.
Social responsibility failings
The Commission also said Videoslots failed to abide by SRCP 3.4.1 Customer interaction. Compliance with this is a condition of the licence under section 82(1) of the Gambling Act.
Here, licensees must interact with users to minimise the risk of gambling harm. This must include identifying and interacting with at-risk players, as well as understanding the impact of interaction.
Videoslots accepted it was not in full compliance with SRCP 3.4.1 during a number of studied periods between October 2019 and October 2022.
The Commission said Videoslots on some occasions did not ensure customers displaying risk behaviours were identified. This was because responsible gambling reviews were not undertaken at the right time. Videoslots also failed to use restrictive measures such as forced deposit limits and playblocks as regularly as it could have.
The regulator said Videoslots also failed to identify if a customer was at risk of experiencing harm by not considering whether the amount being deposited or lost was appropriate.
In one case, a player had a self-declared income of between £60,000 and £80,000. They had also declared savings of between £20,000 and £50,000. The user was able to deposit and lose £98,000 within six months. However, reviews and interactions did not take into account the fact the customer deposited disproportionately to their declared salary.
The Commission noted how Videoslots allowed customers showing indicators of harm to gamble significant amounts after interactions, despite their behaviour continuing.
One player deposited £112,225 and lost £58,725 between 21 November 2021 and 7 January 2022. During that period, the customer hit a number of triggers, which led to three account reviews taking place.
However, an account review was missed on 8 December 2021 and delayed on 29 December 2021. The Commission said Videoslots’ approach to interactions were not implemented as they should have been.
Other failings identified here included how Videoslots carried out ineffective interactions. This was due to Videoslots having information that may have demonstrated an enhanced approach or intervention was required.
Significant weaknesses
The Commission also said the operator’s process for escalating interactions or intervening were ineffective. This was due to an over reliance on customer responses and source of wealth declarations.
In addition, with some of the customer accounts reviewed, there were instances where affordability was not fully considered.
Concluding the case, the Commission said there were significant weaknesses in Videoslots’ ability to implement its policies and procedures for AML and safer gambling purposes. Videoslots also accepted this conclusion.
The regulator noted how Videoslots has taken steps to rectify the breaches, had acted in a timely manner and was co-operative with the investigation. In addition, the Commission said Videoslots was transparent and outlined how operational effectiveness was severely impacted during the relevant period by the pandemic.
However, due to the nature of the breaches, the Commission agreed to impose a financial settlement.
This included a £1.5m payment in lieu of a financial penalty, which will be directed towards socially responsible causes, as well as a divestment of £494,842. In addition, £11,308 will go towards covering the costs of the investigation.
Original article: https://igamingbusiness.com/legal-compliance/legal/videoslots-ordered-to-pay-2m/
