Neal gives his thoughts on the new ‘Industry Voluntary Code on Customer Checks and Documentation Requests Based on Spend’ below.

On May 1^st 2024 the Betting and Gaming council have announced their new ‘Industry Voluntary Code on Customer Checks and Documentation Requests Based on Spend’. Current CEO and acting Chair Michael Dugher has stated ‘It will significantly increase the consistency of safer gambling standards while removing intrusive document checks for many who are currently subject to detailed checks’. But the new code does not alleviate anyone from the current requirements noted within the licence conditions and codes of practice or the related mandatory guidance, it’s crucial that operators do not see this as a means to relax on the existing requirements. It should be noted that this code is set to work alongside the upcoming ‘Code on Anti-Money Laundering checks’ currently being worked on and is only stated as a ‘voluntary interim scheme’, so more is expected to come.

At a high level, the thresholds noted for these checks are;

• £5000 losses (or net deposits) in a month (halved to £2500 for 18-24 years olds), which will require a risk assessment of the customers financial situation.
• £25,000 losses in a rolling 12 month period where a process of enhanced consideration must be taken.

The risk assessment must include one or more example from a list under section 2a which notes things such as a safer gambling interaction, an affordability review including estimated income, an open source information review, a review of information obtained from the customer and financial insights from regulated third parties. Although it says that the enhanced process may be similar to an enhanced due-diligence process, the code clearly states under section 3 that ‘The voluntary code does not require operators to perform document checks at a gross deposit level’, hence document requests are not mandated.

Again, it’s important to note that the actions in line with customers hitting these limits do not actually require customers to submit documentation within the new code. However, it should be stated that Luke ARC supports countless Gambling Operators through assessments and enforcement action and operators are encouraged not to allow themselves to become complacent by setting their EDD thresholds against these levels. The Commissions requirements come first and would never permit such high thresholds without a tangible amount of safer gambling checks and due-diligence well in advance of these loss levels.

When looking into previous Commission enforcement actions we can see example of specific learning from public statements which draws specific attention to much lower threshold which were included in the failings. For examples;

• The penalty for Lindar Media in September 2023 stated ‘some financial thresholds in place to identify the risks associated with ML and TF were set at a level which allowed a customer to deposit and lose £10,000 a figure which did not appear to be sufficiently risk-based’.
• The penalty for Gamesys in January 2024 stated ‘one customer deposited £14,585 in a 28 week period’ (arguably much less than a £5k per month average).

These statements aren’t always easy to decipher, but as someone who has sat in many UKGC compliance assessments I can confidently say that to allow any customer to lose near £5000 in a month without early intervention would not be taken lightly and documents would likely be an expectation at this point.

So I question how thresholds which are set arguably higher, based on loss as opposed to deposit and which don’t mandate documented evidence from the customer will raise standards in a manner accepted by the Commission long term, but again, these are noted to be interim. If an operator was to leave it until these thresholds to carry out checks based on document requests in the current regulatory environment, then the lessons we have seen would suggest they would invite enforcement action. And if an operator has already requested sufficient information at an earlier point then what value do these thresholds add?

Speaking on this code, Andrew Rhodes has stated that ‘These are minimum standards, not maximums. Everybody doesn’t have to do the same thing, but as a minimum they will do these things’. He also stated ‘Am I concerned that people will move to higher thresholds? Well, they [as in gaming operators] have to manage their customers and the customer risk will be assessing whether the interactions are happening when they should be and if they are of sufficient quality’.

‘All of those things remain the same. What this is doing is removing some of the variability we’ve seen because I know there are operators who had thresholds which are higher than this who are coming down, so you will see a mixture of movements’.

The UKGC will often require for an operators thresholds to be rationalised and justified. Admittedly the rationalisation should be particular to the operator so it’s not as easy to rationalise thresholds across the board, but to justify these numbers against noted sources such as the office of national statistics average household income data seems a challenge in my view. So given this comes from a collaborative effort with the commission this could mean the Commission are looking to the more balanced approach which has been eluded to recently.

The BGC have stated on their website ‘Developed jointly with the Gambling Commission and backed by Government, this Code will operate as a voluntary interim scheme – bringing consistency across the regulated sector for operators who adopt it – until the frictionless financial risk assessments set out in the Government’s White Paper can be developed, tested and implemented’. However the light touch financial vulnerability checks will be required at £500 losses in a 30 day period from 30^th August 2024 reducing to £125 monthly losses from 28^th February 2024, with the deeper level check (financial risk assessment) being moved into a pilot scheme. However as these deeper checks were initially proposed at £1,000 losses in a day or £2,000 losses in 90 days it will be interesting to see how he code will align to the final mandated thresholds for the financial risk assessments once the pilot concludes.

So in summary, I believe in the principal behind the code and the efforts made between the BGC and UKGC in collaborating, but I would advise operators to exercise caution and not become complacent by moving to these thresholds while neglecting earlier touch points and checks. I fear some operators may fall into this trap which is clearly not the intend of the code.

If you have any questions on upcoming changes or the current regulatory environment, reach out by emailing [email protected] for a free no obligation consultation.