Videoslots is to pay £650,000 after a UK Gambling Commission investigation revealed Anti-Money Laundering (AML) and social responsibility failures. 

Videoslots Limited – which runs videoslots.co.uk, mrvegas.com and megariches.com – will also receive a warning and is required to undergo a third-party audit to ensure it is effectively implementing its AML and safer gambling policies, procedures and controls.

Social responsibility failures stemmed primarily from a reliance on systems which did not effectively monitor customer activity to identify harm or potential harm associated with gambling. The Commission’s investigation determined that although the operator’s monitoring systems automatically set a monthly deposit limit for customers, that limit ran across a calendar month and did not include the customer’s initial deposit. 

This resulted in one customer losing £5,000 in a month despite having a £3,000 monthly deposit limit, another customer losing £5,000 in less than 24 hours despite having a £3,000 monthly deposit limit and a further customer losing £7,500 over 18 days despite having a £2,000 monthly deposit limit.

In addition, the monitoring systems deployed by Videoslots also did not effectively identify customers who were potentially at risk of gambling harm – one customer did not receive any interaction from the operator despite losing £6,550 over the course of three active days of gambling across a two-month period. 

AML/Countering Terrorist Financing (CTF) failures included gaps in associated policies and procedures, record management omissions and an over-reliance on an algorithm to identify and monitor customer behaviours that appeared in some instances to be ineffective when tested.

In one example, a customer demonstrated a high level of depositing and gambling activity over the course of a 16 day period, funding their account using digital pre-payment vouchers totalling in excess of £75,000. Following gambling activity, the proceeds were transferred to four different bank accounts. The customer was also found on occasion to be accessing their account from outside of Great Britain. 

Despite the presence of a number of high-risk factors, the customer’s automated AML risk score did not trigger the threshold for the operator to request source of funds information in a timely manner, leading to unacceptable delays in an account review taking place and an absence of effective customer due diligence and effective oversight. 

One of the key failures was that the automated scoring system in place at the time did not identify the activity as high risk, and there was a presumption that the activity was funded from recycled winnings without any supporting evidence to explain why the customer was adopting such a complex and unnecessary deposit and withdrawal pattern.

In another example, a customer’s risk profile was not appropriately escalated when the customer conducted a high level of deposits and withdrawals over the course of a month. The operator relied on the fact that the customer had significant wins and assumed that the account was funded from recycled winnings, without sufficient scrutiny or any acceptable form of interaction to validate this. 

John Pierce, Commission Director of Enforcement, said: “Operators are required to have effective Social Responsibility and Anti-Money Laundering policies, procedures and controls as a condition of holding an operating licence. In this case, the operator’s monthly deposit limits were found to be ineffective when tested in practice and AML controls were not applied to the standards we expect.

“The investigation identified a serious example where pre-paid digital vouchers had been used for gambling without effective oversight and early intervention. The over-reliance on an algorithm to monitor risk meant that the customer was able to carry out a high volume of deposits and transfer the proceeds of gambling to multiple different destination accounts with insufficient and timely checks or robust source of funds verification taking place.

“Alongside this, the acceptance of digital vouchers as a method of payment also requires robust controls from a safer gambling perspective, particularly where it is possible to purchase digital vouchers using credit or crypto via third party websites.” 

He continued: “Open-loop payment systems are high risk in nature because they could enable anonymous deposits and make it harder to trace funds. In this case, the licensee failed to implement timely customer interactions and did not conduct enhanced customer du e diligence until the customer had reached significant spend thresholds – such failings are unacceptable.