Deposit Limit System Failures
The UK Gambling Commission found that Videoslots’ customer monitoring systems failed to prevent gambling harm effectively. The operator’s monthly deposit limits operated on a calendar month basis and excluded initial deposits, allowing customers to exceed their intended limits significantly.
Multiple customers suffered substantial losses beyond their deposit limits, including one who lost £5,000 in less than 24 hours despite having a £3,000 monthly limit, and another who lost £7,500 over 18 days with a £2,000 limit in place.
AML Control Deficiencies
The investigation exposed serious weaknesses in the operator’s Anti-Money Laundering procedures. A critical case involved a customer depositing over £75,000 through digital pre-payment vouchers in just 16 days, then transferring proceeds to four different bank accounts while accessing their account from outside Great Britain.
Despite these red flags, the automated risk scoring system failed to trigger source of funds requirements promptly, with the operator incorrectly assuming the activity stemmed from recycled winnings without supporting evidence.
Regulatory Action
John Pierce, Commission Director of Enforcement, stated:
“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.”
Pierce warned about the risks of open-loop payment systems:
“Open-loop payment systems are high risk in nature because they could enable anonymous deposits and make it harder to trace funds. Such failings are unacceptable.”
Industry Impact
The Commission has updated its risk guidance regarding digital vouchers and requires all operators using similar payment methods to report this as a key event immediately. Videoslots must complete an independent audit alongside the financial penalty, with the Commission monitoring compliance closely.
The case emphasizes the critical importance of robust AML controls and effective player protection measures, particularly when handling high-risk payment methods in online gambling operations.
Source: UK Gambling Commission
