Paddy Power slammed by UK watchdog for 'serious' failings
Staff at a Paddy Power shop in Britain were told by a senior colleague to encourage a gambling addict to visit the outlet more often, while its online arm failed to ascertain the source of funds used by a man who it later transpired had stolen £250,000 (€319,000) from clients at two banks where he had worked, a critical UK report has said.
The Irish gambling group - which merged this year with Betfair - has been slammed by the UK's Gambling Commission for its "serious" failings, and voluntarily agreed to pay £280,000 (€357,000) to a "socially responsible cause" in lieu of a financial penalty.
As part of a voluntary settlement, Paddy Power also agreed to the commissioning of an independent, third-party review of its own anti-money laundering and social responsibility controls.
In a report just published, the Birmingham-based Gambling Commission said that Paddy Power had also failed to respond appropriately to suspicions of money laundering after a woman - known as Customer B - frequented a shop in London using Scottish banknotes over a number of months.
"A shop manager suspected that she was using gambling facilities to launder Scottish bank notes by placing them into gaming machines and then requesting a pay-out on a debit card," the Gambling Commission noted in its report.
"The shop manager raised these concerns with more senior staff and was advised to pay out as normal."
The report added: "Paddy Power became aware that police had concerns that Scottish notes that were the proceeds of crime were in circulation in London.
"In light of that, Paddy Power decided to undertake 'enhanced due diligence' checks on Customer B to verify that she had a legitimate source of funds. It was not possible to validate the customer's ownership of a business she claimed to own."
The report also said that an individual who stole a total of £250,000 from six customers at two banks where he worked opened an online account with Paddy Power in April 2014.
The Gambling Commission report noted that the man's level of spending triggered a need to undertake enhanced due diligence, which was performed in September 2014.
But the additional diligence performed was relatively low-level, and included an online search to ensure there was, at the time, no publicly-available negative media coverage of him, and that he was not listed on any sanctions registers.
"Paddy Power made no direct enquiries… about the source of the funds he was gambling," the Gambling Commission report notes. "Paddy Power deemed him to be 'medium risk', and recommended that further information should be obtained.
"However, no further information was obtained from or about him.
"Paddy Power acknowledged that it failed to follow the policies and procedures it had in place for undertaking due diligence checks on customers of its online business."
A Paddy Power Betfair spokesman said the "historical failings" outlined in the report were "clearly unacceptable".
"Paddy Power has since significantly strengthened its internal procedures and staff have been retrained to ensure these procedures are implemented effectively.
"Paddy Power Betfair takes its responsibilities extremely seriously and we have co-operated fully with the Gambling Commission at every stage of this process," the spokesman added.