Money laundering failures see Ladbrokes Coral facing £5.9m penalty package

Failures in controls over money laundering and problem gambling has seen Ladbrokes Coral hit by a £5.9m penalty package by the Gambling Commission and a call to be more concerned about ‘the integrity of money being gambled with’.

An investigation by the regulator found ‘systemic failings’ at the Ladbrokes Coral Group, leading to the financial penalty and commitment to a series of improvement measures that must be implemented by new owner GVC. Further investigations into the actions of Personal Management Licence holders continue.

An investigation by the Gambling Commission found between November 2014 and October 2017 Ladbrokes and Coral failed to put in place effective safeguards to prevent consumers suffering gambling harm and against money laundering, with this failing continuing after their merger as the Ladbrokes Coral Group.

As a result the following occurred:

  • Ladbrokes did not carry out any social responsibility interactions with a customer who lost £98,000 over two-and-a-half years, had 460 attempted deposits into their account declined, and even asked the operator to stop sending promotions.
  • Despite one customer spending £1.5m over two-years 10 months, Coral did not ask the customer to evidence their source of funds and could not provide evidence of any social responsibility interactions being carried out. During their time with the operator the customer displayed signs of problem gambling including logging into their account an average of 10 times a day for a month and losing £64,000 in one month alone.
  • Ladbrokes could not provide any evidence of carrying out social responsibility interactions with a customer who deposited over £140,000 in the first four months of their account being open.
  • Ladbrokes, having identified concerns with a customer, then allowed further significant gambling without taking additional steps to verify the source of funds or consider if the customer could afford to spend and lose that amount of money.

Richard Watson, Commission Executive Director, said: “Decision makers at gambling businesses need to invest in the welfare of their customers and the integrity of money being gambled with.

“These were systemic failings at a large operator which resulted in consumers being harmed and stolen money flowing though the business and this is unacceptable.”

The Gambling Commission found systemic past failings within the Ladbrokes Coral Group in the way that it identified and interacted with customers who were at higher-risk of money laundering and problem gambling.  

These failings stemmed from ‘inadequate’ anti-money laundering (AML) and social responsibility policies and processes, and insufficient staffing to support these systems. The Commission said that this meant the Ladbrokes Coral Group had ineffective controls to identify and interact with customers who may have been suffering gambling harm or money laundering.

Further, when it did identify its AML controls were insufficient, the changes it implemented were not adequate to address the problem.  

In addition to these general failings the regulator discovered an instance where Ladbrokes had identified concerns regarding the source of a customer’s funds, but nevertheless decided to continue their business relationship with the customer and did not conduct any further checks or interactions.  

The Ladbrokes Coral Group has accepted that between 1 November 2014 and 1 October 2017 it did not have adequately resourced AML controls to consistently address the risks presented by higher-risk customers. This was because: 

  • The AML policies and processes in place were not effective. 
  • The policies, procedures and controls were not appropriate to adequately mitigate the risks identified by the risk assessment – particularly the monitoring and review of customers to ensure the proceeds of crime were not being spent on the Licensee’s websites.  
  • The teams responsible for putting these procedures into practice were not adequately resourced, which led to a delay in the reviewing of “at risk” customers and caused the focus to be on only those top customers highlighted by the controls.  
  • There was a lack of adequate documentation and audit trail of account reviews which did take place, and this further reduced the effectiveness of the controls. 

During its investigation the Commission identified failings in accounts held by seven customers across the Ladbrokes Coral Group between 1 November 2014 and 1 October 2017. GVC has agreed accounts held by five additional customers will also be independently reviewed by a firm of solicitors and, where any similar failings are identified, additional divestments will be made accordingly. This is also the case for any further customers brought to their attention where these failings are identified for this time frame.  

As part of this settlement the Ladbrokes Coral Group’s new owners GVC will pay £4.8m in lieu of a financial penalty and will divest £1.1m gained from customers as a result of its failings. GVC will also review the top 50 customers for the years 2015-2017 to consider whether any further failings can be identified, and if so they will divest themselves of profit accordingly.