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Vivaro Limited (Vbet) to Pay £337,000 Penalty For Safe Gambling & Money Laundering Failings

fineThe United Kingdom Gambling Commission is once again in fine form with handing out fines. Starting out the New Year with a penalty to pay is never a good thing. Yet that’s exactly what has happened to Vivaro Limited. Trading as vbet, the company was under investigation by the Commission. During this, various failings in the company’s processes came to light. As a result, the regulatory body has thrown a £337,631 fine at the gambling operator. All the money will go towards causes surrounding social responsibility.

The prevention of money laundering was one area that Vivaro Limited failed in. Safe gambling processes was the other. Rather than pay an outright fine, the company reached a settlement with the Commission. There is a legal duty as part of owning a gambling licence that operators must follow. This should ensure that gambling facilities operate in compliance with the Gambling Act 2005. Many conditions come alongside as part of holding a licence. Certain objectives are also included in the licence, which all operators need to fall in line with.

The Summary of Vivaro Limited’s Failings

image of a parking fine on a car windscreenIn April 2021, a compliance assessment of Vivaro occurred. This led to an investigation by the UKGC. From that, a section 116 regulatory review of Vivaro Limited took place. The results of the investigation found that the brand failed to follow certain conditions. This includes the following areas of note:

  • Paragraphs 2 and 3 of Licence condition 12.1.1, requiring the prevention of money laundering and terrorist financing.
  • Licence condition 12.1.2. requiring operators based in foreign jurisdictions to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information of the Payer) Regulations 2017.
  • Paragraphs 1 and 2 of Social Responsibility Code Provision (SRCP) 3.4.1, requiring licensees to interact with customers in a way which minimises the risk of customers experiencing harms associated with gambling, and to take into account the Commission’s guidance on customer interaction.

Often, such failures have led to the Commission issuing hefty fines to operators. Such was the case with Entain, which had a £17 million penalty handed out in August last year. It was also threatened with the possibility of having its UK licence revoked. Vivaro has opted to make payments instead of paying a penalty package, though. That falls in line with the Statement of principles for licensing and regulation. This settlement surrounds two key failures, which are:

  1. Failure to implement anti-money laundering policies, procedures and controls.
  2. Various deficiencies in policies and procedures surrounding responsible gambling. This includes the weakness of any policy implementation.

The failures by Vivaro Limited occurred between October 2020 and June of 2021.

What Breaches Did The Commission Uncover?

ukgcThe UKGC said that it had discovered a selection of licence breaches by Vivaro Limited. One of the primary areas that has a focus on it at the moment is KYC checks. Vivaro Limited allowed customers to deposit significant sums of money before conducting such. There also wasn’t any adequate guidance for employees to follow with regard to Source of Funds (SOF). All staff members should have proper processes in place to verify a player’s SOF. It should also be clear what documents they need to request from customers.

It’s also the case that anti-money laundering (AML) triggers were set too high. Based on the average level of customer spend, these were not appropriate to manage such risk. During the compliance assessment undertaken, the Commission reviewed customers. They were subject to AML checks, though these proved ineffective in establishing SOF. Vivaro placed a reliance on winnings from other operators, rather than on bank statements.

This resulted in one customer being able to deposit £14,850 in a two-month period. Insufficient SOF checks occurred to establish his financial status. The Commission noted that some checks did take place. Yet these were not deemed enough until the customer had met the high AML threshold. That particular level was set by Vivaro Limited. Instead, the regulatory body states that Vivaro was too reliant on net gambling position.

In the case of another customer, their bank statement displayed a balance of £270,000. The statement highlighted this as winnings from another betting account. Yet Vivaro did not consider the risks associated with recycling those winnings. No extra checks were undertaken to confirm the origin of those funds used to gamble. The Commission noted that customers could be misappropriating funds. This could see them re-deposit fresh criminal spend.

Another risk was not considered by Vivaro Limited. This was the risk associated with funds originating from cryptocurrency used to gamble. Digital currencies of this nature are high risk, according to Commission Officials. Thus, they should qualify for an outright further investigation.

There was no evidence presented of criminal spend with Vivaro Limited from the customers reviewed.

The Breakdown of the Financial Settlement

vbetVivaro and the Commission reached and agreed upon a settlement price of £337,631 for the breaches. Breaking down this total figure, it consists of the following elements:

  • Payment in lieu of a financial penalty of £302,500. This will go to the National Responsible Gambling Strategy projects. It will help to pay for research and treatment as determined appropriate. Thus, it addresses the risk of harmful gambling.
  • A sum of £35,131 in divestment
  • Vivaro has also had further conditions applied to its licence under section 117(1)(b) of the Gambling Act. This requires the company to:
  1. Undertake a third-party audit within 12 months of the conclusion of the review. This will examine whether the company is implementing effective AML policies. It will also look into the social responsibility practices and controls.
  2. Submit a copy of the audit report to the Commission. This must occur within 5 working days of Vivaro receiving the report.
  • Vivaro also had to agree to the publication of the statement of facts by the Commission.
  • The company had to make a payment of £15,606.50 towards the Commission’s investigative costs.

Vivaro accepted the outcome of the investigation by the UKGC. It noted the significant weaknesses in its systems about AML and social responsibility. To determine the outcome of reaching a settlement, the Commission considered various factors. This included the length of time of the licence condition breaches. It also considered how timely Vivaro responded to the issues identified. The regulatory body also took into consideration the nature of the company’s business. This included their financial resources.

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