4 September 2024
Summary
In Touch Games Limited (ITG), a UK gambling firm, has faced repeated investigations by the UK Gambling Commission due to non-compliance with anti-money laundering and social responsibility standards. Since 2017, ITG has been fined multiple times, totalling over £11.7 million for various infractions. A significant aspect of these investigations involved a third-party audit by RSM in 2021, which uncovered potential fraudulent activities, including the manipulation of customer data to misrepresent compliance. These findings were further supported by whistleblower Nicholas Burton, who accused ITG executives of forging customer financial documents to deceive auditors and retain their gambling licence.
Regulatory Scrutiny of In Touch Games
ITG came under regulatory scrutiny due to failures in its compliance with the UK Gambling Commission’s Licensing Conditions and Codes of Practice (LCCP), particularly concerning anti-money laundering (AML) controls and social responsibility (SR) obligations:
2017 Investigation:The first investigation began in 2017, focusing on ITG's compliance with AML and SR regulations. The investigation concluded with ITG agreeing to a £2.2 million settlement, which it paid in lieu of a financial penalty. The issues identified related to the company's failure to adequately monitor high-risk gambling activity and protect vulnerable players.
2019 Investigation:In 2019, a second investigation was launched after further concerns were raised regarding ITG’s adherence to AML and SR standards. This investigation led to another regulatory finding in March 2021, where ITG was fined £3.4 million for breaches, including inadequate AML controls and failure to properly engage with customers displaying signs of problem gambling. Additionally, a licence condition was imposed requiring ITG to undergo a third-party audit.
2022 Investigation and Fine:In 2022, the Gambling Commission conducted another compliance assessment, which culminated in ITG being fined £6.1 million in January 2023. This investigation revealed further breaches of AML and SR obligations, continuing the pattern of regulatory concerns surrounding the company's operations.
The RSM Audit and Allegations of Fraud
As part of the second investigation, the Gambling Commission required ITG to undergo an independent third-party audit to assess its compliance with the LCCP. RSM Risk Assurance Services LLP was appointed to conduct this audit in 2021. The audit was essential for ITG’s continued operation in the UK, as failure to pass the audit would have resulted in further regulatory sanctions, including potential revocation of its gambling licence:
Audit Timeline: The audit commenced in May 2021, with a draft report presented to ITG in June 2021. The draft highlighted shortcomings in ITG's AML and SR controls, identifying areas where the company was not meeting minimum regulatory standards.
Allegations of Fraud: During the audit, it was alleged that ITG manipulated customer account records to present a misleading picture of its compliance. It was claimed that key financial documents, including player bank statements and payslips, were forged to show that high-stakes players had legitimate sources of funds, thereby masking potential money laundering and problem gambling issues. ITG provided feedback on the draft report, seeking to alter its content and downplay the severity of the issues raised.
September 2021 Review: A key part of the RSM audit involved a review of a sample of customer accounts in September 2021. Allegations later surfaced that these accounts had been selectively manipulated, with forged documents inserted to mislead the auditors about the financial status of certain players. It was also alleged that ITG’s internal systems had been adjusted to delete evidence of non-compliant activities from its database.
The Whistleblower Allegations
On 4 February 2022, Nicholas Burton, a former employee of Ruskin Properties Limited (a company linked to ITG), issued a letter through solicitors accusing ITG of engaging in audit fraud during the RSM audit. The letter contained specific allegations of forgery and misconduct within the company, particularly concerning the manipulation of player financial records:
Key Allegations: The whistleblower alleged that, under the direction of Simon Robert Wilson, ITG’s former Chief Executive Officer, employees forged player bank statements and payslips in August 2021 to present to the auditors. Mr Burton claimed that ITG lacked the correct documents to demonstrate players' legitimate financial means and that the forged documents were used to hide this from auditors.
Details of the Alleged Fraud: Mr Burton reported that in late August 2021, he was asked by Mr Wilson to review a batch of documents, only to discover that many of them were forgeries. He further alleged that key ITG employees, including Mr Jeffery Lu and Ms Mengchen Kang, were involved in creating these forgeries to pass the audit. According to Mr Burton, these actions were intended to ensure ITG’s licence remained intact despite its failure to comply with regulatory requirements.
Further Allegations: In addition to the audit fraud, Mr Burton also alleged that he was mistreated after raising concerns internally, including threats made by Mr Wilson and false allegations spread to discredit him. These claims formed part of a whistleblower claim that Mr Burton threatened to bring before an Employment Tribunal, alleging that his protected disclosures had led to retaliation.
Conclusion
A problem gambler could potentially bring a range of claims against In Touch Games Limited, depending on the specific facts of their case and the extent to which ITG’s regulatory breaches and alleged fraudulent activities impacted their gambling behavior. Claims could range from breach of contract and negligence to more serious allegations of misrepresentation and fraud. As the case involving Skywind’s allegations of fraud progresses, it could significantly influence the types of claims available to affected gamblers and the remedies they might pursue.
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