To manage financial checks: know what to ask for

Does your compliance department know what it is doing?

That may sound like an impertinent question, but it is one prompted by the recent appearance of Harry Stewart-Moore (partner at Gardner Leader, specialists in betting and gambling law) on the Smart Betting Club Podcast, in which he has a good many interesting to say about the current situation around affordability checks.

The whole episode is well worth a listen, but what he had to say around the operator response to the emerging affordability requirement was most interesting - and where hopefully some of our experience can help (keep reading - lots of good advice coming up!).

Harry paints a convincing picture of an industry very much on the back foot and struggling to understand precisely what the job in hand looks like. Or in his own words:

“Because bookmakers were not required to take regulations seriously for a very long time, there is a culture of under-investment and under-training in their compliance teams. So they’re not ready for this.”

This in turn leads to “completely incomprehensible requests for information” from compliance teams, customers being “constantly being asked for the same information or variations of it” and in general a situation where:

“the bookmakers don’t begin to understand what it is they are now being asked to do, and they are engaged in an exercise of massive overkill”

All this ends with the absurd (and hopefully not common) story of a customer being asked to walk a compliance office through an online bank statement via TeamViewer or similar - something that understandably puts customers off - and leads to large numbers refusing to engage with the process

Yes, it’s difficult

Before going further it is worth noting that Harry does acknowledge that the Gambling Commission haven’t necessarily helped matters in the past. When guidelines are vague, and in some cases only delivered in retrospect, after a failed audit, it can be almost impossible for operators to stay on the right side of regulation.

As a result, it isn’t surprising that many over-react, and that a culture develops where saying “No” is easier than saying “yes”. It is also true that we’ve seen a wide variety of responses. Some operators are very much on their game, others are struggling.

But two core facts remain true:

  1. Affordability checks are not going away. And AML checks are certainly not going away
  2. The percentage of our customers who complete these checks is a vitally important number for any operators business.

Let’s talk about what your compliance team needs to know in order to ensure that percentage is as high as possible.

A route out

Understanding what you need to ask for, and what you don’t need to ask for, is vitally important. After all, the more you ask for, the fewer customers will manage to complete the process.

Remember, when it comes to affordability and AML checks, the two key questions are these:

  • Can this customer afford to stake in the way they are doing, and
  • Do the funds being used come from a legitimate source?

Given this is the case, what is the minimum amount of documentation you can ask for that enables a compliance team to answer these questions? 

The answer to that rhetorical question is “bank statements”. But it is still the case that in many cases operators present their customers with a veritable pick and mix of documents they might like to supply, many of which are completely unnecessary and some of which are quite pointless.

So firstly, focus on the fact that less is more

I might put the above in another way, which is that bank statements alone are enough*, and all the documentation in the world without bank statements will never be enough. 

On this basis, strip back all messaging to be absolutely clear around what is required, rather than involving all sorts of different documents which are either redundant or pointless. Then, focus on the simplest, easiest way to access the data that is in those bank statements.

As you might have guessed, that is Open Banking. It is superior to manual sharing of documents in a number of ways:

  • For the customer, it only requires a couple of clicks and is done in under a minute. It is fast, easy, and is done almost without thinking
  • It is completely secure, and nobody shares their bank details with anybody
  • 12 months of data is automatically shared, giving far better insight than any other method or any other documentation
  • Data is shared digitally, so it is easy to automatically ‘run the numbers’ and come to a decision quickly
  • By the same token, compliance officers don’t have to root around in a customer’s affairs unless it is absolutely necessary
  • Customers remain connected, so there’s no need to go back on a regular basis asking them for the same information all over again.

So here’s the conclusion: if you suspect that your compliance team doesn’t know what it is doing when it comes to affordability checks, show them this blog post. Focus solely on bank statement data in terms of documentation, and then focus on collecting that data as simply and securely as possible.

If you do, you will meet your regulatory obligations AND retain more customers during these checks than ever before. Good luck!

*Clearly in some cases more investigation will be required, but in the majority of cases bank statements are all that is needed.