Paddy Power fined nearly £310k for anti-money laundering, KYC shortcomings

paddy-power-gambling-commission-fineIrish betting operator Paddy Power has been hit with nearly £310k in fines and penalties following a UK Gambling Commission probe into the company’s anti-money-laundering and know-your-customer practices.

On Monday, the UKGC released a statement detailing “failures in anti-money laundering controls” at Paddy’s online and land-based betting businesses. The UKGC said it was spotlighting Paddy’s “serious failings” in the hope that other UK-licensed operators would take note and avoid a similar trip to the regulatory woodshed.

In the first case detailed by the UKGC, Paddy’s retail operations were slammed for not properly ascertaining the source of the funds a high-value customer was wagering via fixed-odds betting terminals (FOBT).

Queried on the origins of his wealth, the customer claimed to own a number of restaurants, an assertion the staff reportedly took at face value, which makes you wonder how they might have responded had he claimed to own a chain of Irish-themed betting shops.

Paddy staff subsequently learned that the bettor was working five jobs to fund his wagering but the bettor claimed to be comfortable with his level of betting activity, and thus Paddy allowed him to continue. However, when his appearances at the shop became less frequent, senior Paddy staff advised that actions be taken to incentivize the punter to come around more often.

A Paddy staffer later ran into the punter on the street and learned that the punter had lost all his jobs and was now homeless. The UKGC says this was the first point at which Paddy management decided to point the man in the direction of problem gambling support services.

The second retail case flagged by the UKGC involved a female punter who a shop manager suspected of laundering Scottish bank notes through FOBT. Despite repeated alerts to senior staff, the manager was told he needed to substantiate his suspicions before any action could be taken.

Six months later, the police voiced their own concerns regarding Scots cash being laundered in London, after which Paddy attempted to ascertain the source of the punter’s funds. Unable to verify her claims, Paddy barred her from the shops and filed a suspicious activity report. Paddy subsequently copped that the senior staff’s response to the manager’s reports had been in the wrong.

The third case involved one Mark Cooney, a bank employee who stole £250k from bank customers in order to fund his online wagering habit. The scale of Cooney’s wagering prompted Paddy to investigate the source of his wealth, but this was limited to confirming that his name didn’t appear on any sanctions lists or in any negative media reports, and that he owned a house worth £125k.

However, despite Paddy labeling Cooney a ‘medium risk’ and recommending further investigation, Paddy failed to contact Cooney directly regarding the source of his wealth and obtained no further information from any other source.

To atone for these lapses, the UKGC ordered Paddy to pay £280k – representing the profits earned via the three customers – to “an agreed socially responsible cause,” plus a further payment of £27,250 to cover the UKGC’s investigative costs.

A Paddy Power Betfair spokesperson issued a statement that called the shortcomings detailed in the UKGC report “clearly unacceptable” and claimed that the operator had “significantly strengthened its internal procedures” as a result.

The UKGC has been active on the KYC and AML fronts of late, having dropped six-figure fines on numerous land-based and online operators, including Caesars Entertainment, Rank Group, Coral and Aspers Casinos.

Given that two of the three Paddy cases involve FOBT, the usual UK media suspects – the Daily Mail, the Telegraph, and (now) the Times – are furiously recycling their ‘crack cocaine of gambling’ headlines. Please, operators… stop feeding the trolls.