Regulator Issues Warning to Operators Over Third-Party Responsibilities as FSB Receive Sanctions for Failings

May 9, 2020 | Government

BIRMINGHAM, U.K.  — Gambling businesses are being warned that they will face regulatory action if they do not carefully manage all the third-party websites that they are responsible for.

The warning follows regulatory action taken against FSB Technology (UK) who will have to change the way it operates with additional licence conditions and pay £600,000 for advertising, money laundering and social responsibility failings.

FSB’s business model includes contracting provisions of its licensed activities to third parties. This arrangement, often referred to as a ‘white label’, places responsibility on the licensee to ensure that its third-party partners keep gambling fair, safe and crime-free.

However, a Gambling Commission investigation discovered FSB did not have sufficient oversight of three third-party websites (1) or effective anti-money money laundering and social responsibility policies and procedures in place between January 2017 and August 2019. For example:

  • Ineffective customer interactions with, and source of funds checks on, a customer who displayed indicators of problem gambling and spent £282,000 over an 18-month period
  • Sending a marketing email to 2,324 customers who had previously self-excluded
  • A VIP team manager acting without adequate oversight and not receiving sufficient AML training
  • Placement of an inappropriate banner advertisement containing cartoon nudity on a Great Britain facing website which was providing unauthorised access to copyrighted content.

Richard Watson, Commission Executive Director, said: “All operators should pay close attention to this case as it shows that we hold all licensees fully responsible for third party relationships – and we will act against any of our licensees that do not manage third parties appropriately.

These were blatant breaches of rules we have put in place to ensure gambling is fair, safe and crime-free.”

In addition to paying £600,000 towards delivering the National Strategy to Reduce Gambling Harms, FSB will also have additional conditions on its licence to ensure it conducts risk-based due diligence on new and current third party partners it runs websites on behalf of.

The Commission is still reviewing the actions of personal management licence holders involved in this case.

Read public statement Here

SOURCE: Gambling Commission.