The Isle of Man Gambling Supervision Commission (GSC) issued a civil penalty of £700,000 on Betsson subsidiary BMO Manx.
It comes after a thorough examination that uncovered several infractions of established rules and laws.
The investigations revealed major flaws in BMO’s policies, procedures, and operational frameworks, particularly its anti-money laundering (AML) and counter-terrorism financing (CFT) compliance.
The investigation identified severe shortcomings in the company’s AML/CFT compliance. Among the most serious flaws were the company’s lack of Enhanced Due Diligence (EDD) for high-risk customers and its failure to handle anomalous actions as needed.
Furthermore, BMO’s Customer Due Diligence (CDD) rules did not specify clear procedures for adopting EDD or conducting extra monitoring in the event of questionable activities.
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BMO, which no longer maintains a GSC gaming license, also lacked processes for determining the need to terminate client agreements when EDD was not delivered within a reasonable timeframe, as required.
Furthermore, the company’s suspicious activity reporting (SAR) mechanism was deemed fragmented, with inefficiencies caused by the involvement of several organizations spanning activities in Peru and Malta before cases were sent to the Money Laundering Reporting Officer (MLRO).
Another significant compliance flaw was BMO’s insufficient procedures for identifying Politically Exposed Persons (PEPs) and ensuring timely verification of customer identification.
The lack of rigorous risk assessments, both for customers and technology, exacerbated regulatory violations.
Notably, BMO delayed the implementation of their Business Risk Assessment for six months after beginning online gaming activities.
Operational deficiencies in governance and oversight.
The inquiry also revealed flaws in BMO’s governance structure, particularly in the allocation of responsibilities between the MLRO and the AML/CFT compliance officer.
Both roles failed to demonstrate enough access to information and resources in order to meet regulatory requirements. Furthermore, internal disclosures were not immediately escalated, and SARs were not always sent to the Financial Intelligence Unit as required.
The company’s AML/CFT training plan also fell short of expectations. Key workers were not routinely included on training registers, and many staff did not receive annual training.
Furthermore, the AML/CFT compliance officer did not review or update compliance policies on a regular basis, resulting in significant supervision gaps.
Regulatory reaction and penalties
Given the scope and severity of the noncompliance, the Commission found that a discretionary civil penalty was justified. The failings, which affected several areas of regulation, revealed systemic flaws that needed immediate regulatory action.
Despite the critical findings, BMO admitted its operational flaws early in the examination and worked constructively with the Commission to rectify the issues raised. The corporation began settlement talks and exhibited a willingness to resolve disputes.
The Commission highlighted this cooperative approach as a mitigating element. It also gave BMO a break, as the £700,000 penalties was initially set at £1 million.
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