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Debate: Do UK betting shops need heavier regulation with regards to money laundering?

The

Money laundering
UK Gambling Commission (UKGC) revealed in December in response to a Freedom of Information request that there were 633 suspicious activity reports (SARs) filed by the UK non-remote betting sector between April 2014 and March 2015.

UKGC has since confirmed to Gambling Insider that its 633 figure is inclusive of horseracing and greyhound tracks and pointed us in the direction of the National Crime Agency, which said in its last annual report that UK bookmakers accounted for 520 filed SARs between October 2014 and September 2015. This made up 21% of an industry-wide total of 2,459 SARs.

A reaction to the 633 figure posted by UKGC was articulated in differing forms, with The Mirror running a story titled: “Betting shops fear drug barons are laundering cash in gambling machines”, which claimed that criminals “plough drug money” into gambling machines.

The Association of British Bookmakers responded to the figure by arguing that 93% of the betting-shop sector were not flagging up SARs and that the sector accounted for just 0.03% of the overall total of SARs reported by all industries for the period.

The topic of money laundering via betting shops has naturally split opinion, so Gambling Insider has spoken to those on both sides of the fence on this subject to try and determine if increased regulation of UK betting shops is necessary.

Adrian Parkinson, consultant and spokesman, Campaign for Fairer Gambling:

"My view on it is that the figures are extremely low. We pushed the story about 633 SARs and one of the reasons we did that is not because we’re trying to say that 633 is a huge number – it’s actually not.

Look at the issue with Paddy Power [where a UKGC investigation found failures in its responsibility and anti-money laundering measures], which has showed exactly what is happening in the shops and why these reports are not being submitted. Look at the example of the shop manager who flagged up the fact that a guy had walked in and transacted all these Scottish notes through the machines. He logged a call to who we can assume was his area manager, to say he had suspicions about what he had watched the customer do. His area manager said not to worry about it, everything’s ok, the notes aren’t dyed and you’ve got no problem. That is endemic of the culture that exists within the bookmaking sector at the moment.

We don’t assume that fixed-odds betting terminals (FOBTs) are the be all and end all of money laundering – absolutely not. The point that we’re trying to make is that not enough SARs are being reported and that the product that is offered within betting shops that offers the best opportunity for people to launder money and transact proceeds are FOBTs, because of the anonymity.

The government is considering whether to include betting shops in the EU4 money-laundering directive. Our argument to the industry is: Why would you want to be excluded? All it asks for is that anybody transacting £1500 of cash in a 24-hour period should be identified by a company and the company should keep a record of those individuals losing that amount of money."

Ciaran O’Brien, group communications director, William Hill:

"It shouldn't be surprising that out of the millions of shop visits by customers every year, bookmakers can be targeted by criminals, as with many other types of businesses. These reports are examples of the industry undertaking its regulatory responsibilities and they should not be criticised for doing so.

These reports should not affect the image of the industry. However, there is an active campaign who will misuse information to portray the industry in a negative light. Gambling does divide opinion and it does make good copy for the media.

Staff can monitor play in real time and activity that could be classified as an attempt to launder money will trigger alerts and software. If there is any suspicion of attempted money laundering, our security teams are informed and the customer would be approached for further details, such as proof of income. If appropriate, an SAR will be submitted. The idea that these are easy vehicles for money laundering does not make sense. High stakes customer play can be tracked, they are on CCTV and where play is suspicious we have methods to flag that on receipts, which in any case are rarely asked for.

We are looking at ways the industry can cooperate more closely to share information and minimise risks. The anti-money laundering directive regulations are onerous on the industry - tracking play across channel for relatively low staking sums, for example. These do not reflect the low level of risk in the industry compared with say banking or property transactions."

Parkinson and O’Brien were both contributing to a wider article on the topic of UK bookmakers potentially being exploited for money-laundering schemes that will appear in the May/June 2016 issue of Gambling Insider. You can sign up for a free subscription here.
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