UKGC's Stiff Penalty of Tech Provider FSB Sends Wake-up Call to Third Party Providers

Published May 21, 2020 by Lee R

UKGC's Stiff Penalty of Tech Provider FSB Sends Wake-up Call to Third Party Providers

The latest UKGC penalty forces FSB and all other UK tech companies to change the way it operates.

Everyone knows that this year has brought new and more stringent guidelines from the UKGC. Now they are learning how far they extend.

The Fine

FSB Technology was the example: the lesson was a £600k fine over “responsibility failings.”

The Basis

The UKGC handed down the penalty as a result of findings of FSB industry compliance violations in the categories of money laundering, advertising, and social responsibility.

The Violations

The basic failure that led to the charges was FSB's failure of due diligence on all “new and existing partners” with the penalties resulting of behaviors stemming from three FSB third-party partners.

FSB due diligence breakdowns included “subpar customer interactions” such as failure to check source of funds for a customer showing signs of problem gambling; a marketing email to 2,324 people who had already self-excluded from an FSB client; and a VIP manager failing to conducting proper oversight as a result of not being properly trained in anti-money laundering policies; and the displaying of an ad on a site that had cartoon nudity.

Aftermath

As a result, additional standards will be added to FSB's operating permits.

The violations themselves stem from an essential component of FSB and many technology companies business models, called “white labeling.”

The White Labeling Implications

The practice of contracting bundles of a portion or all of a company's licensed activities to third part service providers is a widespread industry practice.

The UKGC decision puts all operators on notice that the responsibility to ensure gambling offerings are “crime-free, fair, and safe” extends to operator content and advertising by white label providers as well.

The Warning Sign

Since white label providers such as FB tech make their living from supplying significant portions of content to as many clients as possible, the UKGC's message would amount to: not only do you have to behave compliantly, you have to make sure your clients behave in a compliant manner as well.

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