ID failings to blame for issues during gambling financial risk checks trial, British regulator says
The Gambling Commission says incomplete or inaccurate personal information prevented some accounts from being matched to credit reference agency records.
UK.- Amid ongoing controversy over the decision to introduce financial risk assessments for gambling (FRAs) in the UK, the Gambling Commission has published new details from last year’s pilot. The regulator suggests that operator shortcomings in identity verification processes undermined the scheme.
The gambling and racing sectors have run campaigns against the introduction of FRAs, which they say will push more players to the black market to avoid intrusive checks. Questions have also been raised over the Gambling Commission’s decision to advance with a two-stage introduction of the assessments before publishing a full review of its evidence from the pilot.
The industry has highlighted cases of friction during the trial as part of its argument against FRAs. However, the Gambling Commission now says that much of this friction was caused by industry failures in customer onboarding, particularly issues around incomplete or inaccurate personal information prevented some accounts from being matched to credit reference agency records.
In a blog post published on the regulator’s website, senior executives Helen Rhodes and Sarah Webster stressed that the pilot relied on operators being able to verify customer identities against third-party data sources. Where matching failed, customers were categorised as “unmatched” and subjected to more cumbersome checks. On closer analysis, the regulator found that this minority of cases revealed recurring problems such as initials being used instead of full names, nicknames replacing legal forenames, and commercial addresses submitted in place of residential ones.
These inaccuracies reduced matching success and also weakened protections like Gamstop and measures against fraud and money laundering, the Gambling Commission said. The regulator has reminded operators that under Licence Condition 17 they must ensure a customer’s name, address and date of birth all match before gambling is permitted. According to the blog, more than 25 per cent of complaints received by the Commission’s Contact Centre relate to identity verification issues, which also remain a leading cause of disputes escalated to alternative dispute resolution services.
Gambling Commission criticises “reactive approach”
Casework suggests that many operators only investigate identity flags and financial risk alerts at the point of withdrawal. The regulator criticised this reactive approach, arguing that it frustrates customers, increases complaints and risks breaching licence conditions and anti-money laundering rules. While the Commission clarified that enhanced due diligence is not expected for every customer at registration, it urged operators to apply robust checks to ensure unique identities are properly verified.
“While we recognise that many operators rely on third-party providers for identity verification, we are concerned by the differing levels of data sensitivity and robustness that these providers offer, combined with the differing levels of tolerance among operators,” the regulator said. “This can result in the use of ‘fuzzy matching’, where customers are onboarded on the basis of partial or equivocal verification of their credentials. This introduces risk across multiple regulatory areas, including contributing to unmatched data”.
It added: “We do not expect the equivalent of Enhanced Due Diligence (EDD) at the point of onboarding all new customers. However, operators should be as robust as possible at registration to assure themselves that they have verified a unique individual at onboarding and to minimise the risk of customer friction later in the customer journey. It is not appropriate to wait until a withdrawal request to follow up outstanding queries.
“Ensuring that robust identity verification checks are carried out at the outset is one of the most effective ways to reduce friction for customers. The pilot analysis highlights an opportunity for operators to review and strengthen their registration and verification processes, improve compliance with existing requirements, and ensure the customer journey is as frictionless as possible. Operators must ensure that complete and accurate customer information is collected at registration, that their verification standards provide robust assurance of identity, meet the necessary requirements and that unresolved identity concerns are addressed promptly rather than deferred until later interactions with the customer. Taking these steps will not only support better and more transparent customer outcomes, but will also strengthen operators’ ability to meet their wider regulatory obligations.”
