Gambling Commission warns over new AI and crypto threats to AML duties
The Gambling Commission’s enforcement director spoke at the Gambling Anti-Money Laundering Group Training Day.
UK.- The British Gambling Commission believes that operators are not scrutinising customer data appropriately as part of their anti-money laundering (AML) duties. Speaking at the Gambling Anti-Money Laundering Group Training Day, enforcement director John Pierce said operators should review customer profiles and monitoring procedures to ensure profiles align with the “full range of risk”, including transactions, geographic location and product risk.
Pierce said that some customer triggers were proving to be ineffective and that some operators were failing to identify irregular spending by “over-relying” on self-declarations and open-source information instead of considering a customer’s salary and wealth. He also cited cases of large sums being transferred before any AML review was conducted.
“Operators should also consider setting realistic and effective monetary and non-monetary thresholds and triggers for determining when further information should be sought from customers, as well as seeking such conversations earlier on in the customer relationship,” he said.
He added that the Gambling Commission is concerned that some operators are not following their own procedures to obtain source of funds information, stressing: “We expect source of funds information to be requested on a risk-based approach but, where this is done, it should not be treated as a tick-box exercise. It is key that staff are given sufficient guidance on how to review documents and identify red flags, how to verify source of funds information and how to record their decision making.”
New crypto and AI threats
Pierce also took the opportunity to talk about what the regulator sees as emerging threats. He said there had been an increase in customers using artificial intelligence to forge documents for identification and source of funds evidence. The regulator has also observed more cases of ID farming, in which others’ personal data is used to obtain bank accounts and then set up gaming accounts.
The regulator is also concerned about an increase in the use of mule accounts to launder money and the increase in the number of payment providers offering crypto payments.
“As cryptocurrencies become more prevalent, we expect more payment providers to offer crypto payment facilities,” Pierce said. “Operators need to have a full understanding of the services provided by their payment providers.”
The Gambling Commission has provided an update on its pilot of financial risk checks for online gambling. The pilot focuses on the use of frictionless financial risk assessments by credit agencies using historical data. The aim is to complete the pilot by April 2025.
The regulator says the pilot will be tested against four key criteria. Stage 1 focused on how many high-spending customers could be assessed without disruptions. Subsequent stages will focus on how quickly credit reference agencies can return assessments, how relevant and accurate the data is for assessing financial risk and how easily it can integrate the assessments into processes.
Meanwhile, several major UK banks have taken up the Gambling Commission’s call to join the Money and Mental Health Policy Institute‘s Gambling Harms Action Lab. Barclays, first direct, HSBC UK, Monzo, Starling, Virgin Money and Nationwide have committed to the innovation programme, which aims to develop and implement new tools to address gambling-related harm.
The Gambling Harms Action Lab is funded via a regulatory settlement approved by the Gambling Commission. Over the next 18 months, the institutions involved will explore and address common challenges to improving support for people experiencing gambling harm.
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