The Isle of Man Gambling Supervision Commission (GSC) has levied a £700,000 fine on BMO Manx Limited for significant compliance failures related to anti-money laundering (AML) and counter-terrorism financing (CFT) regulations. The penalty, initially set at £1 million, was reduced by 30% after BMO cooperated with the regulator early in the investigation.
The GSC conducted an inspection of BMO in May 2023, which uncovered breaches of the Gambling (Anti-Money Laundering and Countering the Financing of Terrorism) Code 2019. The company failed to meet standards in critical areas such as enhanced due diligence (EDD), risk assessments, and reporting protocols. These lapses triggered a regulatory investigation, culminating in the civil penalty.
BMO, a Betsson Group subsidiary, operated under the Isle of Man’s Online Gambling Regulation Act 2001 until its license was surrendered in August 2023. Despite being tasked with adhering to strict compliance protocols, BMO was found to have neglected key requirements during its operations.
Investigation Unveils Multiple Deficiencies
The regulatory probe revealed numerous areas where BMO failed to align with compliance standards:
- Enhanced Due Diligence: The company did not conduct EDD for customers flagged as high-risk for money laundering or terrorist financing.
- Suspicious Activity Reporting: Reporting processes were diluted across operations in Peru and Malta, delaying disclosures to the Financial Intelligence Unit.
- Risk Assessments: BMO delayed implementing its business risk assessment and failed to establish a tailored technology risk policy.
- Politically Exposed Persons (PEPs): Procedures to identify PEPs were either absent or inadequately maintained.
- Training and Monitoring: The company did not ensure annual compliance training for key personnel or adequate internal monitoring.
The GSC emphasized the severity of these breaches, noting that the scale and nature of non-compliance justified the civil penalty.
Regulatory Lessons and Future Actions
The GSC highlighted key takeaways from this case in a public statement, underlining the importance of robust scrutiny when acquiring customer bases or transferring business operations to the Isle of Man. The regulator warned that such transitions pose greater risks if customers originate from jurisdictions with lower regulatory standards.
A strong compliance framework, timely reporting to authorities, and comprehensive training for staff were identified as critical components of an effective AML/CFT regime. Operators failing in these areas can expect strict regulatory measures. The Commission reaffirmed its commitment to maintaining the Isle of Man’s reputation as a well-regulated jurisdiction, stating it would continue exercising its authority to address material risks. This case underscores the increasing regulatory scrutiny faced by online gambling operators and the necessity for firms to adhere to stringent compliance protocols.
