Shares of online gambling behemoth 888 Holdings [LON: 888] took a steep 27% drop in early trading on Monday after the Gibraltar-based company's CEO, Itai Pazner, resigned. This follows an internal review discovering shortcomings in the company's anti-money laundering (AML) processes.

According to a statement released to the London Stock Exchange, 888 has decided to suspend VIP activities in the Middle East as an internal compliance investigation is carried out. The statement disclosed that some best practices concerning "Know Your Client" (KYC) and AML procedures had not been adhered to for VIP customers in the region. The company also noted that the impact is expected to be less than 3% of Group revenues if the suspension continues, with the deficiencies limited to this particular region.

Investors' concerns were palpable, resulting in the largest single-day decline in 888's history, erasing over a quarter of its value. Current chairman, Lord Jonathan Mendelsohn, will step in as executive chair on a temporary basis as the search for Pazner's replacement begins. CFO Yariv Dafna announced he would stay on until year-end, even though he was scheduled to leave by March's end.

Lord Mendelsohn assured that the company is committed to strict compliance. "We will be uncompromising in our approach to compliance as we build a strong and sustainable business,” he stated.

Pazner's exit follows a history of regulatory troubles for 888. Last year, the UK Gambling Commission handed down a fine of £9.4 million (US$11.6 million) for social responsibility and AML deficiencies, one of its largest penalties ever. This came after a £7.8 million (US$9.5 million) fine in previous years for failing to protect vulnerable customers. UKGC's CEO, Andrew Rhodes, has warned that any further violations by 888 could lead the regulator to question the company's fitness to operate.