UK businesses rely too much on AI for money laundering monitoring, Gambling Commission says
The British regulator is concerned that British gambling operators are falling short on AML standards due to a heavy reliance on artificial intelligence.
UK.- The British Gambling Commission has raised concerns that companies are falling short on anti-money laundering (AML) standards amid an increasing reliance on artificial intelligence (AI). John Pierce, the Commission’s Director of Enforcement, used his speech at the Gambling Anti-Money Laundering Group (GAMLG) Annual Conference yesterday (June 10) to caution against blind reliance on technology.
AI-driven compliance tools are increasingly common in high-risk industries such as finance and gambling, and the systems have the advantage of being able to scan vast amounts of customer transaction data for irregularities and to automatically generate suspicious activity reports (SARs). However, Pierce warned that algorithms are not a catch-all safeguard.
“We aren’t ideologically against the use of new technology in your processes,” he said. “But you need to be sure they are doing what is required and the evidence we’ve seen so far is too often they simply aren’t delivering. So if your business is considering this type of approach, make sure it’s delivering compliance before you launch it.”
Pierce also pointed to shortcomings beyond technology. He noted that Personal Management Licence (PML) holders, the individuals responsible for overseeing AML at licensed operators — have in some cases failed to exercise adequate oversight. He added that some firms are neglecting risk-based approaches in their internal assessments, either overlooking certain risks or failing to consider them altogether.
“I think it’s fair to say that we have been getting tougher on PMLs at the commission in recent years and this ought to be a wake-up call to anyone with a PML to make sure you are on top of this stuff,” he remarked.
As for the areas where AML compliance is falling short, the regulator said it had seen recurring weaknesses in three key areas third-party oversight, including inadequate due diligence for white label partnerships, issues with record-keeping, including poor documentation of rationale and decision-making, and excessive dependence on financial thresholds rather than proactive customer risk profiling.
Pierce warned that the Gambling Commission often sees a “disconnect between risk assessments and policies and procedures, and the controls put in place to carry out those policies”. He also cited cases in which senior executives have been surprised at how policies are carried out in practice on the ground in their businesses.
“That we continue to see this as an issue suggests the message hasn’t got through yet so if you take anything away from this speech today, make sure you go back to your businesses and make sure your application and practice matches the outcomes of your risk assessments and what your policies say should be happening,” he said.
The regulatory landscape has tightened significantly since the April 2023 White Paper concluded the review of the 2005 Gambling Act. ‘light-touch’ Financial Vulnerability Assessments were rolled out in February 2024 and a decision on more controversial Financial Risk Assessments remains pending.
Pierce acknowledged that requiring customers to provide financial documents can be “painful,” but stressed that AML enforcement is non-negotiable.
Pierce’s warning comes as the UK prepares for its assessment by the Financial Action Task Force (FATF) in 2027. The Gambling Commission intends to publish a comprehensive AML risk assessment in July to provide a resource to inform operators’ own risk assessments. The document will highlight risks and vulnerabilities identified across the different sectors.
In recent years, AML failings have led to severe penalties for operators, with Entain and William Hill hit with fines of £17m and £19.2m respectively in 2022 and 2023 for AML and social responsibility breaches. The Gambling Commission has also intensified scrutiny of B2B and white label arrangements, exemplified by TGP Europe’s licence surrender just over a year ago.
