A gambling business will pay a £2,022,000 penalty after a Gambling Commission investigation revealed Anti-Money Laundering (AML) and social responsibility failings.

Spreadex Limited – which operates from Spreadex.com – will also have to undergo a third-party audit to ensure it is effectively implementing its anti-money laundering and safer gambling policies, procedures and controls.

The failures were revealed during a compliance assessment in July 2023 and relate to the operator’s Gambling Commission licence to offer casino and fixed odds betting. 

Anti-money laundering failures included: The Licensee’s Money Laundering and Terrorist Financing (ML/TF) risk assessment failed to consider key customer, product, geographic and payment risks as detailed in the Commission’s guidance and therefore failed to take a sufficiently risk-based approach to Anti-Money Laundering (AML).

The AML policies, procedures and controls were not appropriate to prevent ML/TF. The Licensee was overly reliant on customers’ self-reported financial position and customers were able to continue depositing substantial amounts of money without providing Source Of Funds (SOF) information in line with the risks present.

For example, a customer opened an account and deposited circa £64,000 into the business within a short period of time but the Licensee did not request SOF information in line with the risks present and the customer went on to lose £50,000 within one month.

The Licensee repeated the same checks on customers without increasing the levels of scrutiny when a customer’s risk increased due to significantly larger deposits or gambling activity.

A social responsibility failure included: Not conducting a stronger form of customer interaction to ensure that a customer who hit a daily deposit limit of £3,340 12 times in 14 days was not potentially suffering gambling related harm. Despite the high spend in a short period, the operator restricted its social responsibility interactions to four pop-up messages and did not carry out human interactions.

This is the second occasion Spreadex has faced enforcement action – in 2022 the operator paid a £1.36 million regulatory settlement for social responsibility and anti-money laundering failures.

John Pierce, Commission Head of Enforcement, said: “The conclusion of this case marks the second time Spreadex Limited has been subject to enforcement action. Its failure to uphold anti-money laundering standards, delays in necessary interventions, and weaknesses in social responsibility measures were unacceptable.

“The operator placed undue reliance on customer assurances about the source of funds, rather than obtaining evidence from independent and verifiable sources, as we would expect. Operators must not only implement and maintain robust anti-money laundering policies, procedures, and controls, but also act swiftly in response to any indicators of suspicious activity.

“During the review, it was found that one customer, showing markers of harm, was using products across areas overseen by two different regulators. As the gambling regulator, we stress the importance of licensees understanding and managing cross-channel usage in their anti-money laundering and social responsibility policies.

“We work closely with the Financial Conduct Authority (FCA) to ensure a coordinated approach. This is particularly critical when there are concerns regarding a customer’s gambling activity from an AML or social responsibility perspective. The ability to assess customer risk in a holistic manner is essential for effective risk management and is an expected practice.

“Effective social responsibility measures must be in place at all times to ensure that consumers identified as being at risk receive timely and proportionate interventions.

“Operators should be in no doubt: repeated regulatory failings will result in escalating enforcement action.”