Customer Due Diligence will never go out of fashion

Some good news: one industry in Britain is certainly booming. The ongoing delay, leaks and rumours surrounding the government’s gambling white paper have been keeping soothsayers, readers of tea leaves and all other variants of fortune tellers in business for well over a year now.

Indeed, not a week goes by without some new curveball arriving on the scene, most recently the intervention of Paul Scully, the UK’s ‘gambling minister’, who let the world know that “it is not the role of government or the Gambling Commission to tell people how much of their salary they are ‘allowed to’ spend on gambling.”

I certainly would not look to minimise the significance of this statement. It is the clearest indication yet that there is pushback against the ‘affordability checks’ narrative within Government itself. And although it isn’t the main purpose of this blog post, I would just say two things in response:

  • Firstly, if the industry thinks that this is a ‘win’ in anything but the short-term, they are sorely mistaken. Ultimately, even though you may think this unfair, the affordability conversation is now in the same place as the whip conversation (apologies to non-racing people, but trust me when I suggest you don’t need to know the details). This is now about responding to public opinion and owning the situation. There are harms associated with gambling. We have to address them, not wish them away. Affordability checks are ultimately the only true way to address them, and like Arnold Schwarzenegger himself, they will be back.
  • Second, Mr Scully’s wording was very carefully chosen. The Gambling Commission themselves would agree that it isn’t their job to tell people how to spend their money. They would, however, consider it their job to ensure that gambling does not cause serious financial harm. I doubt Mr Scully, or anyone, would disagree with that objective. 

But as hinted at in my first point above, the great sense I have when listening to this ongoing conversation is that it is one minor wrinkle within an inexorable movement, one towards demanding that businesses know and protect their customers much more effectively than they do today.

AML and all the rest

Over the past couple of decades there has been a slew of legislation and regulation that places increased demands - for entirely understandable reasons - on businesses of all types. Many of these can be filed under ‘Know Your Customer’ (KYC) or ‘Anti Money Laundering’ (AML), although of course in some senses the former is a subset of the latter.

Taken as a whole, these checks demand an increasing amount of customer due diligence, and in particular of what is commonly called ‘Enhanced Due Diligence’ (EDD), in which businesses need to take a closer look, particularly at individuals transacting in larger amounts. 

Looking at AML specifically, in addition to learning about the customer in greater detail, it also demands in most cases source of funds (SOF) checks. For a gambling operator, these checks mean establishing that the money a customer is betting with has come from a legitimate source.

There is only one reliable way to establish this, and that is by viewing the financial data - or in other words the bank statements - of the customer. Operators do this today, and you can be absolutely sure that they will continue to do so. Nobody imagines that an ambiguous statement from a Government minister, who may be out of a job in the blink of an eye, can make these checks go away.

Just as with ID verification, these checks are now a fact of life. And while the details may change from time to time, the direction of traffic when it comes to EDD in general is only going one way: expect to have to know more details about your customers, more of the time. 

And it’s not just regulation

Meanwhile, businesses in multiple sectors are learning that EDD can in fact benefit the bottom line, or at least enable them to improve their offering to customers. 


  • The lender who can approve loans to customers based on their true financial status, rather than an estimate
  • The insurance company that reduces fraud (and thus premiums) by insisting on an Open Banking connection
  • The property management company that de-risks its operations by checking the financial situation of potential tenants

In all these cases, EDD isn’t an irritating burden, it is a route to a better, more profitable business. 

And the same can be true in gambling. With Cheltenham around the corner, doesn’t it make sense to identify those customers who are inevitably about to hit AML checks, and take steps now to get them through? The alternative - waiting to do so in the 40 minutes between the Supreme Novice Hurdle and the Arkle - doesn’t sound too tempting an alternative.

What the industry needs to do, sooner rather than later, is take a proactive approach to delivering a sustainable industry. One that understands the need for EDD checks, and works to make them as simple as possible: conducted at a time and in a way that doesn’t put off the customer or prevent them from betting when they wish to.

Anything else is just burying our heads in the sand.