Betfred to pay £3.25m GC settlement over social responsibility and AML breaches

Betfred has agreed to pay a £3.25m settlement to the Gambling Commission (GC) after an investigation revealed failings in its anti-money laundering (AML) and social responsibility policies.

The breaches relate to a period between January 2021 and December 2022 when the firm was found to have inadequate standards in relation to licensing codes for appropriate AML policies and customer interaction.

In respect of AML breaches identified, Betfred was found to have “poor” record-keeping practices and its financial alert thresholds, the points at which an operator might sound the alarm over a potential AML breach, were set too high.

In an example highlighted by the GC, one customer lost £61,000 within a four-month period and no action was taken as Betfred had previously concluded there were ‘no AML concerns’, with the firm relying solely on an ID document.

Investigators also found that Betfred staff had failed to consistently obtain appropriate know your customer (KYC) documentation and source of funds (SOF) when these thresholds were met.

In another example, a customer hit the AML trigger of £250,000 staked in 365 days, however, the customer’s ID was only requested 10 days after the trigger, a circumstance that Betfred was unable to explain to GC investigators.

In addition, the GC said Betfred placed an “undue reliance” on open-source verification information and should have taken further steps to corroborate source of funds information.

Instances highlighted included one customer losing £72,000 within nine months, with no KYC checks being conducted, while in another instance, a customer staked £429,222 and lost £120,353 over 11 months. In both cases, GC investigators found that Betfred relied on “uncorroborated” open-source information.

Betfred’s social responsibility failings identified by the GC included having insufficient new customer controls, as well as lacking controls to monitor so-called “high velocity” spend and duration of play, exposing customers to potential gambling-related harm without customer interaction.

In one case Betfred was found to have made assumptions that customers were not at risk of harm because they were winning customers. This included a failure to conduct any safer gambling interactions on one customer who staked £517,499 over a two-month period.

Betfred said that it was of the view the customer was a professional poker player and displayed no signs to encourage an interaction, given they were in a winning position of £8,585 during the period.

In another example of social responsibility failings, a customer played for a period of five months and deposited £337,029 with a loss of £19,336.28 and placed a total of 1,375 bets.

The customer was interacted with 12 times with Betfred noting that each interaction was positive and indicated the customer was happy at this level of spend.

However, during some interactions the customer demonstrated signs of potential harms such as their card being declined and placing large bets. 

“The interactions did not escalate in any way and there is no evidence to suggest this customer was offered any information or support. The only factor that appears to have been considered was whether the customer appeared happy to continue to gamble,” the GC said in its public statement.

Betfred has agreed to make a settlement payment of £3.25m in lieu of a fine, inclusive of a £1,052,717 divestment, with monies being directed towards socially responsible causes.

The operator has also agreed to pay the GC’s costs in conducting the review.

Betfred has implemented an early action plan to remedy its failings and the GC noted the operator’s early and voluntary acceptance of its findings.

In response to news of the settlement, a Betfred spokesperson said: “Following a review of our UK based betting shops we have entered into a regulatory settlement with the Gambling Commission. As noted in the commission’s findings, we implemented an early action plan to remedy our identified weaknesses and we strengthened our anti-money laundering and social responsibility policies. During the assessment however, the commission found no evidence of criminal spend in any of our shops. Betfred remains committed to ensuring that a safer gambling ethos lies at the very heart of our business.”

This penalty comes less than 12 months after the Warrington-based bookmaker was slapped with a £2.9m fine by the GC for similar failings.

GC executive director of operations Kay Roberts asserted the need for UK licensed operators to maintain a high standards, calling on firms to take note of the findings of this case.

“In recent years, there’s been a public focus on online gambling but this case illustrates how important it is for us to continue our drive to raise standards across the whole industry,” Roberts said.

“Gambling is a legitimate leisure activity enjoyed safely by millions but it is vital that every single operator – either online or offline – has in place effective safeguards to prevent harm or crime,” she added.