Ouch: 888 Group Bids Goodbye to Key Figures After Discovering AML and KYC Failings
Published February 4, 2023 by Lee R
Iconic 888 CEO Itai Pazner has fallen prey to AML and KYC failings.
Compliance failings at iGaming operating giant 888 have resulted in an unsightly fall from grace that iGaming operators should take heed of to a man.
CEO Pazner Leaves
The main piece to topple is right at the top: 888 CEO Itai Pazner is abruptly leaving his post, in the wake of a plethora of AML and KYC failings for Middle East customers.
Pazner Replacement
Non-executive chairman Lord Mendelsohn assumes the interim CEO post while a permanent replacement is sought by the group’s Board of Directors.
Pazner at 888
Pazner’s departure comes after over 20 years of service that saw dynamic growth--and on the heels of 888’s additional announcement of the suspension of VIP activities in certain key dot.com markets.
Middle East Failings
After a great rise, Pazner leaves the company in a shambles: his supervision overlooked key Anti-Money Laundering and Know Your Customer KYC practices for customers in the Middle East that could have resulted in catastrophic damages to the company’s reputation and coiffeurs (in the form of increasingly commonplace fines industry-wide).
Pazner’s Career
Pazner’s appointment as 888 CEO in January 2019 was at the time the cherry on top of a two-decade rise through the organization. Pazner’s reign at the 888 helm oversaw epochal organizational events such as the acquisition of non-US William Hill in July 2022, as well as the successful expansion into and across the key North American markets of the US and Canada.
Acting CEO Speaks
Despite the final failings, Mendelsohn bid Pazner a fond farewell:
“On behalf of the board I would like to thank Itai for his significant contributions to the business over more than 20 years, including the last four as CEO.”
Cup Half Full
Despite the ignominious ending, there were countless positives that Pazner turned in along the way. Mendelsohn focused on those positives even in departure, lauding the “important role” role Pazner played in “building a business with powerful proprietary technology.”
Saying Goodbye
Mendelsohn further cited “the importance of the successful early stages to the William Hill integration process” before wishing Pazner well in future endeavors.
Other Top Exec Leaving
Pazner’s departure is just part of the shakeup at the top of 888, after the earlier announcement that chief financial officer Yariv Dafna would be stepping down on 31 March (later extended to the end of 2023).
Dafna Issue
The Dafna resignation came in part due to sagging performance at 888, which warned of a 3% year-on-year revenue decline figure coming in for the 2022 fiscal. The full reasons for these failings were not disclosed, but clearly represent more related fallout from mismanagement at the top.
Middle East Suspended
The procedural failings that led to Pazner’s departure also resulted in a suspension of all VIP activities for Middle Eastern customers until the completion of the internal compliance investigation which resulted from that final mismanagement.
Self-Monitoring Revealed
The company discovered its culpability first, following an internal compliance review revealing the KYC and AML failings for 888’s VIP Middle East customers.
Impact of Suspension
The suspension of VIP customer accounts in the Middle East across the board is a move that is projected to affect less than 3% of the total 888 group revenue. The company has also ascertained that the failings were strictly in the Middle East, and not organization-wide for the global 888 presence.
Embracing Accountability
Mendelsohn asserted the accountability of 888:
“The board and I take the group’s compliance responsibilities incredibly seriously. When we were alerted to issues with some of 888’s VIP customers, the board took decisive actions.”
Maintaining Sustainability
Mendelsohn assures continued vigilance as well, saying the group would remain “uncompromising” in the approach to compliance, further asserting 888’s commitment to continue to build a “strong and sustainable business.”
Shares Drop
The Pazner issue was costly in another way: London-based 888 Holdings shares dropped a whopping 15.99% to 86.70 pence per share following the announcement of his departure and the reasons why.
Ramifications
The drop in shares should not be seen as a surprise, but are an important indicator of what any company that fails in compliance procedures is faced with.
Preventative Action
The executive shaking up at the top of a company on a scale of 888 is a salient reminder of the need to remain compliant and to self-monitor for compliance on an ongoing basis. Fines for AML and KYC procedural violations have been proliferating industry-wide, and it looks as if 888 was well to act preventatively to avoid penalties.
Proactive Monitoring
The fact that 888 discovered and announced the failings and took action shows organisational accountability, and an important desire and sincerity to remain compliant when failings are discovered.
Rising From the Ashes
Despite the failings, the 888 example ultimately exemplifies a resilience that should be emulated by all industry operators in the movement towards an increasingly preventative self-monitoring environment and a greater compliant iGaming culture.
Outlook
A good look at AML and KYC procedures from the outset of every launch or term would certainly behoove all iGaming operators, in order to avoid the egg on the face that comes from ignoring them.
