There was once a time when a gaming entity’s Operations Manager was the top dog when the regulator came to visit. The Money Laundering Reporting Officer (MLRO), by contrast, was only really called upon in times of crisis. In recent years, however, this paradigm has changed and it is now your MLRO that needs to be prepared to take their place at the head of the pack. Are we pushing the pooch puns too far? Well, even if you came for the shameless pug, you may as well stay for the sound gambling compliance advice.
Horses for Courses and Pugs for Rugs
How did this transformation take place? Over time, the regulators have come to recognise that whilst the Operations Manager does have a broad technical understanding of the business, the key to protecting players actually lies in the company’s risk management, and the Operations Manager isn’t where the detailed knowledge of the business’ risk lies – in most cases they can actually get better detail from the MLRO.
As such, that position has slowly gained more prominence during reviews and visits. Regulators now commonly look to the MLRO first, to manage the risk of the whole business through a thorough knowledge of their business operations and the creation of risk-based controls.
The question for gaming entities is whether they have acknowledged and accounted for this shift in regulators’ focus, by ensuring they have a top-notch MLRO in place and empowered with the right business insights.
How to be Snug in a Rug
The key to any successful business is ensuring that every element ‘adds value’ and this is becoming ever truer with your appointment of an MLRO. Get it wrong and you can soon become lost and frozen in a regulatory wasteland; get it right and you’ll be… well, we’ve covered the rug thing extensively already.
In order to handle a modern regulatory audit, your MLRO needs to be comfortable acting as the ever-present figure that will need to speak with confidence and knowledge as to how the operator copes with enhanced risk, prohibiting under age gambling and promoting responsible use. One of the core competencies required in order to do so is the proper managing of suspicious activity reports. You need to have an experienced MLRO who is able to work closely with all relevant parties to ensure:
- All internal parties are aware of when an internal disclosure should be submitted and to whom it should be submitted
- The process of submitting is time and cost efficient
- The operator has sufficient systems and controls in place so that the MLRO can review all the relevant information in an unfettered manner
- A decision is made based on the relevant information in a timely manner
- They hold a working knowledge of your systems in order that they can evidence to the regulator that they know how the system works and how to obtain the necessary evidence
- Policies and procedures are up to date
- There are sufficient processes by which the business can risk assess each participant, know the risk profile of their business and easily determine and where applicable mitigate the relevant risks that are posed to the business.
Those are the basics. Unfortunately, despite the granular detail this sort of reporting requires, many gaming entities are still operating without a dedicated MLRO. With so much reliance being placed on the role, however, there are a number of questions that the owner of a gaming enterprise may want to consider:
- If you are doing this yourself currently, do you really want to be the MLRO for your business? Can you allocate the amount of time that is needed to carry out this role? Do you have the relevant knowledge and expertise? Is it an effective use of your time?
- If you have someone already, does your current MLRO fully understand their role within the business and do they have the skill sets to be able to manage your engine room effectively?
- Does your MLRO have sufficient support to carry out the role?
- Do you understand the risks posed by your business, your client risk profile and what you should be obtaining from those participants that pose the greatest risks?
- Can you afford to get the choice of MLRO wrong?
So, after reading this list, do you feel snug or out in the cold? If it’s the latter, please do get in touch for a chat. Our compliance and recruitment teams, respectively, can either provide a managed service or help you find the best talent in the industry.
Please do drop me a line if you would like to discuss your compliance needs. I will be at ICE Totally Gaming in London 2-4 February, which may be a good opportunity to meet in person.