Daub Alderney Fined £7.1m for Anti-Money Laundering Failures

Daub Alderney, a subsidiary of online bingo operator, Stride Gaming, has been fined by the UKGC and is due to pay a £7.1m fine for failing to comply with the Commission’s rules aimed at preventing money laundering and protecting vulnerable consumers. The company will additionally face “extra conditions” placed on its license.

The decision notice reads that the action is “part of an ongoing investigation into the online casino sector. The operator’s standards did not match the protections required, and this fine reflects the seriousness of these lapses.”

Immediately following the announcement, Stride’s share price slumped 6%, but has consolidated since.

Timeline

Upon the completion of the corporate evaluation (June/July 2017), the UKGC determined that the appropriate risk assessment was not in place. The Commission made Daub aware of the requirements in a letter submitted on October 5, 2017.

On January 12, 2018, the UKGC informed the licensee that a review of its operating license was underway. The regulator suspected that the activities “have been carried on in purported reliance on the license but not in accordance with a condition of the license.”

On April 18, 2018, the case was referred to the Commission’s Regulatory Panel for a decision. The Panel decided that Daub had breached conditions of its license relating to anti-money laundering measures (AML) and had failed to comply with social responsibility codes of practice.

In its responses, Daub admitted it had breached the condition, subsequently providing a risk assessment approved by its Board on February 23, 2018.

The Panel found that the licensee did not conduct appropriate ongoing monitoring of a business relationship, apply sufficient enhanced customer due diligence measures and enhanced ongoing monitoring, establish and maintain appropriate and risk-sensitive policies and procedures relating to specified matters in order to prevent activities related to money laundering and terrorist financing, keep full records of the evidence and supporting documents it considered as part of its customer due diligence checks and business relationship with the customer, and provide relevant staff with regular training in how to recognize and deal with transactions and other activities which may relate to money laundering or terrorist financing.

‘Significant Financial Penalty’ not wholly Unexpected

The ruling follows Stride’s September announcement that it was expecting a “significant financial penalty” after reviewing how one of its undisclosed brands “historically carried out its licensed activities.”

The brand in question later turned out to be Daub Alderney. The UKGC’s initial evaluation led Stride to conduct an audit of all customers to have deposited £50,000 over the time they held accounts with Daub, and discovered that the funds of ca. 742 accounts didn’t have sufficient information on the source.

Thereupon the business tightened the parameters for depositing £50,000 in 12 months, but even that measure failed to turn up satisfactory information on the source of 63 accounts’ funds. Daub went on to “cease transacting with those customers,” blocking the accounts to prevent deposits or withdrawal.

Stride affirmed at the time that it had made a £4m provision for the fine, but the ruling nearly doubles the amount.

According to the UKGC, the Panel “agreed that it was appropriate to impose a financial penalty under section 121 of the Act and (…) concluded that it was appropriate for the Licensee to pay a financial penalty of £7,100,000 and that this was a proportionate outcome.”

Source:

“Daub Alderney to pay £7.1m fine for anti-money laundering and social responsibility failures”, gamblingcommission.gov.uk, November 13, 2018.