Maintaining a compliance culture in the COVID-19 era
May 19, 2021
By Stuart Walker
Midway through the second quarter of 2021, with 2020 a continuing brutal memory, the gaming industry looks forward to better days ahead and prepares itself for what we all hope will be the roaring 2020s.
Gaming organizations have detailed plans for reopening with the goal of ensuring a safe, quality, and fun gaming experience. With the process of closing and reopening having been repeated on more than one occasion for many facilities, reopening plans are becoming routine as operators begin to understand how to move forward in the COVID-19 era.
But there are still numerous questions pertaining to the casino reopening environment:
- How quickly will guests return to the casino?
- What needs to be done to reassure guest safety?
- What will the gaming experience resemble in a socially distanced world?
Speaking to colleagues in the business, they share their anxiety and hopes for the future. Revenue generation, cost efficiencies, employee turnover, and customer retention are just some of their priorities.
Sit in on a quarterly report for a publicly traded gaming organization and you will find many of the same topics:
- Revenue challenges
- Cost efficiencies
- Significant change and uncertainty
- And, most importantly, the health and safety of staff and customer
This has been a very difficult period for gaming organizations and one that we all hope will be a once-in-a-lifetime event. As gaming organizations begin to ramp up, bring furloughed employees back to work, enhance marketing plans, implement robust plans to ensure the safety of customers and employees, and manage costs like never before, there is the possibility that compliance could slip through the cracks. Many employees have been furloughed for over a year. In some cases, it’s likely that little thought has been given to gaming or anti-money laundering (AML) compliance.
It should be noted that gaming organizations have done an admirable job over the last number of years ramping up their AML teams and programs. They recognize that increased compliance and AML scrutiny within gaming is here to stay. Risks associated with terrorist financing and money laundering are increasing as organized criminals have exploited this volatile economic situation and sought opportunities to launder their illicit funds. Estimates are that $5.8 trillion worth of financial crime was perpetrated in 2018 - equivalent to 6.7 per cent of global GDP.
As gaming organizations prepare their back-to-work plans, leaders need to ensure that compliance and AML remain top of mind and do not get lost in the shuffle due to other competing priorities. A compliance program is only as good as the established culture around it. It is critically important that senior management, leadership, and owners of gaming organizations actively support compliance efforts through adequate resources, both financial and staffing, and not sacrifice such efforts to revenue concerns. Leadership must demonstrate that compliance is one of the top priorities as their sites reopen, as this will make it easier to reestablish a culture of compliance with the casino.
These executives need to consider how they can keep their employees focused on compliance and AML as soon as they return to work. Evolving reopening plans need to address how compliance and AML will remain a focus for all employees. Regulators will expect that the rules will be followed. All employees will need to attend refresher training as soon as they return to work. Without job-specific financial crime compliance training, casino staff cannot be expected to understand and identify the suspicious activity they are required to report. Moreover, high employee turnover represents a significant risk to gaming organizations, where maintaining a workforce that has been properly trained can be challenging. It doesn’t take too many negative headlines to alert regulators. A gaming organization’s resilience against financial crime depends on its people.
One of the risks senior executives need to consider is that, in many cases, their compliance and AML specialists may have moved to new sectors. Banks, insurance companies, and money service businesses are all ramping up their own compliance and AML teams as regulators tighten their grip on these sectors. Consequently, competition for these key roles is intense. Executives need to be working with their sites to ensure they have the compliance and AML resources to continue to have an effective and sustainable program.
There is much to look forward to in 2021 as COVID-19 vaccinations are rapidly rolled out to the Canadian population.
Economic indicators from Export Development Canada predict that there will be GDP growth of 5.4 per cent in 2021 and 4.1 per cent in 2022. Savings have skyrocketed, with RBC senior economist Nathan Janzen noting that households accumulated $212billion in savings last year. That is about $184 billion above pre-COVID-19 numbers and could give a jolt to the economy as the year rolls on. Unemployment levels have dropped significantly and, in some ways, we are not far from where we were a year ago. This all hopefully indicates that as COVID-19 restrictions are eased, the pent-up demand for spending on things like travel, hospitality, and gaming will be the strongest seen in many years.
All that is to say that while gaming organizations have had a tough year, better days are on the horizon. But, as part of the preparations for the industry reopening, compliance and AML must remain a priority. As much as there will be significant demand from law-abiding customers, there will also be criminals sitting on their built-up stash of dirty money looking for a means to clean it.
Gaming organizations need to be prepared for that scenario.
Stuart Walker is the founder of Gaming Advisory Services, which provides consulting and advice to the gaming industry with a focus on gaming compliance and gaming AML. He can be reached at 519-381-1684 or email@example.com.