Virtual Global Digital Services, an online subsidiary of 888 Holdings, has reached a settlement of £2.9 million ($3.7 million) with the Gibraltar Gambling Commissioner due to shortcomings in their Know Your Customer (KYC) and Enhanced Due Diligence (EDD) procedures. This settlement follows an internal review conducted earlier this year that identified multiple issues in these areas.
Background:
The internal review, initiated after 888 suspended ‘VIP’ activities in specific markets in January, uncovered several key deficiencies:
Ineffective KYC Controls: Virtual Global Digital Services had ineffective KYC controls, leading to lapses in customer identity verification.
Overreliance on High EDD Thresholds: The company historically relied excessively on high thresholds for Enhanced Due Diligence, which resulted in insufficient scrutiny of certain accounts.
Inconsistent and Weak EDD Checks: EDD checks were inconsistent and lacked rigor, allowing some customers to evade comprehensive assessments.
Inconsistent Approach to Account Restrictions and Closures: There was an inconsistent approach to imposing restrictions or closing accounts when red flags were identified.
Failure to Obtain Required Documentation: Some customers were not asked to provide essential source of funds and source of wealth documentation.
Remedial Actions:
888 took immediate steps to address the identified deficiencies. New policies and procedures were introduced, and relevant accounts underwent an updated risk assessment process by April 2023.
Factors Considered in Settlement:
The Gambling Commissioner considered several factors when agreeing to the £2.9 million settlement:
888’s prompt self-disclosure of the issues.
The suspension of accounts, which resulted in a loss of revenue.
The swift implementation of internal compliance reviews and control enhancements.
Importantly, the Commissioner clarified that no cases involving dealing with the proceeds of crime or terrorist financing were identified.
Supporting Responsible Gaming:
A portion of the settlement will be allocated to the Centre of Excellence for Responsible Gaming at the University of Gibraltar. This funding will support the center’s efforts in preventing and treating problem gambling.
Ongoing Compliance:
Despite the settlement, 888 remains deemed fit and proper to hold licenses in Gibraltar. The company has implemented enhanced policies and procedures to rectify the identified deficiencies.
Virtual Global Digital Services’ settlement with the Gibraltar Gambling Commissioner serves as a reminder of the critical importance of robust KYC and EDD procedures in the gambling industry. The prompt actions taken by 888 to address these issues and their commitment to responsible gaming underscore their dedication to maintaining the highest standards of compliance and player protection.