The Isle of Man Gambling Supervision Commission recently issued a public statement regarding significant regulatory breaches by Shelgeyr Limited, and its Maverick Games brand. This enforcement action followed an extensive inspection that revealed multiple contraventions of the Gambling Anti Money Laundering and Countering the Financing of Terrorism Code 2019. The investigation concluded that the operator failed to maintain robust financial crime defenses during its period of licensure. Consequently, the Commission imposed a discretionary civil penalty of 200,000 pounds to reflect the severity of these systemic oversights. Shelgeyr Limited cooperated with the authorities throughout the process, leading to a discounted final fine amount.
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Gambling Compliance Deficiencies
The regulatory scrutiny directed at Shelgeyr Limited highlighted a fundamental breakdown in the application of enhanced due diligence protocols. Inspectors discovered that the entity allowed specific accounts to remain active or even reopen despite a lack of sufficient documentation regarding the source of funds. In certain instances, accounts that were previously suspended due to missing information were not correctly transitioned to a closed status, which directly contradicts local legislative requirements. The failure to rigorously apply these measures created an environment where the origins of customer wealth could not be verified with the necessary level of certainty. By neglecting to scrutinize high-risk transactions and customer profiles, the operator undermined the broader efforts of the Isle of Man to secure its financial system against illicit activity.
The investigation also identified a critical lack of oversight regarding politically exposed persons. The operator was unable to provide evidence that it had conducted the necessary background checks to either confirm or discount the status of potential matches against global databases. This specific failure is particularly concerning within the gambling sector, as politically exposed persons often represent a higher risk for bribery or corruption. Without documented procedures to verify the legitimacy of such individuals, the firm remained vulnerable to being used as a conduit for moving funds of suspicious origin. The Commission noted that the company did not follow its own internal manuals, suggesting that the existing compliance frameworks were purely theoretical rather than operational.
Systemic Failures in Customer Due Diligence
Beyond high-risk categories, the company demonstrated a broader inability to obtain and maintain standard identification information for its general user base. The Commission found that many customers were permitted to engage in transactions without providing full personal details, which essentially facilitated the maintenance of anonymous accounts. Such practices are strictly forbidden under modern financial regulations because they prevent the effective tracking of money flows. Furthermore, the firm failed to keep adequate records of customer correspondence and automated monitoring analysis outside of its primary systems. This lack of data redundancy meant that the reasoning behind certain compliance decisions could not be independently audited or verified by the regulator.
The quality of ongoing monitoring was also called into question during the enforcement process. While the operator may have had some monitoring practices in place, these were not consistently documented in the formal compliance manual. This led to a situation where the effectiveness of operational controls could not be measured or improved over time. The regulator emphasized that a financial institution must be able to demonstrate a continuous cycle of testing and review to ensure that its defenses remain relevant to changing threats. By failing to monitor its own operational procedures, the company allowed gaps to persist in its day-to-day management of customer risks, particularly in relation to the evolving nature of digital transactions.
Risk Assessment and Technological Oversight
A significant portion of the investigation focused on the inadequacy of the business risk assessment conducted by the operator. The firm did not show sufficient regard for the specific nature of its business or the inherent risks associated with the jurisdictions from which it accepted customers. National risk assessments provided by the Isle of Man and other relevant territories were seemingly ignored or undervalued in the company’s strategic planning. This lack of geographical and sectoral awareness meant that the firm was ill-equipped to handle the complexities of a global customer base. The failure to align internal risk appetites with the realities of the international gambling market represented a major flaw in the corporate governance structure.
The emergence of virtual currencies added another layer of complexity that the operator failed to address adequately. The technology risk assessment did not sufficiently consider the dangers posed by accepting convertible virtual currency payments. Without specific measures to mitigate the anonymity and speed associated with crypto assets, the operator increased its exposure to potential money laundering schemes. The regulator pointed out that the manner in which products were delivered to customers, particularly in non-face-to-face environments, required more stringent verification than what was being applied. The absence of a clear strategy for managing digital asset risks highlighted a disconnect between the firm’s technological offerings and its regulatory obligations.
Governance and Professional Training Standards
The leadership and specialized roles within the organization were found to be lacking the necessary authority and expertise. Both the Money Laundering Reporting Officer and the Compliance Officer were unable to demonstrate that they possessed the requisite knowledge to fulfill their legal duties effectively. In many cases, these individuals lacked the organizational power to resolve conflicts of interest, which is essential for maintaining an independent compliance function. When the personnel responsible for stopping financial crime are sidelined or underqualified, the entire regulatory framework of the company becomes compromised. This structural weakness was a primary factor in the repeated failures identified by the Commission during the inspection period.
Education and awareness among the broader staff were equally deficient, with evidence suggesting that key personnel had not undergone recent training. The investigation revealed that updates regarding new developments in financial crime had not been provided to employees for over twelve months. In an industry characterized by rapidly changing tactics used by criminals, stagnant training programs leave a firm highly vulnerable. The Commission expects the board of directors of any licensed operator to maintain active oversight of training schedules and system updates. By neglecting the professional development of its workforce, the entity failed to foster a culture of compliance that could have identified and mitigated the risks before they escalated into formal contraventions.
Key Points
- The operator was required to pay a 200,000£ penalty for failing to verify the source of wealth and conduct proper due diligence on its customers.
- Systemic issues were identified in the management of high risk accounts and the verification of individuals with potential political connections.
- The company failed to implement an adequate risk assessment strategy regarding the use of virtual currencies and international business hazards.
- Leadership roles, including the reporting office,r lacked the necessary expertise and authority to manage the firm’s anti-money laundering obligations effectively.
Related Links
- Isle of Man Gambling Supervision Commission Public Statements
- Gambling Anti-Money Laundering and Countering the Financing of Terrorism Act 2018
- FATF Guidance for a Risk-Based Approach for the Gambling Sector
- Isle of Man Government Financial Crime National Risk Assessment
Other FinCrime Central Article About Isle of Man Gambling Scrutiny
- Isle of Man’s AML Framework Tightens Grip on Network Gambling Risks
- Isle of Man Hits Celton Manx with £3.9 Million Fine over AML Failures
Source: Isle of Man Gambling Commission
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