Gambling Commission issues £2 million fine to Spreadex

Britain’s Gambling Commission has handed Spreadex a fine of £2.0 million ($2.6 million) after ruling that the operator breached several anti-money laundering (AML) and social responsibility regulations.

The commission identified the failures during a compliance assessment in July 2023. The regulator said these related to Spreadex’s licence to offer casino and fixed odds betting in Great Britain.

Detailing the case, the commission said breaches took place between September 2022 and November 2023. In addition to a fine, Spreadex will undergo a third-party audit to ensure it is implementing AML and safer gambling policies, procedures and controls.

Incidentally, this is the second time Spreadex has faced enforcement action. In August 2022, it was ordered to pay a £1.4 million regulatory settlement for social responsibility and AML failures.

Spreadex player lost £50,000 in one month

Setting out some of the AML failures, the commission said Spreadex’s money laundering and terrorist financing risk assessment fell short. The operator failed to consider key customer, product, geographic and payment risks, as required by the commission.

The regulator said these AML policies, procedures and controls were not appropriate to prevent money laundering and terrorist financing. It noted Spreadex was overly reliant on customers’ self-reported financial position. Players were able to continue depositing large amounts without providing source of funds information.

Flagging one example, the commission noted how one customer opened an account and deposited around £64,000 within a short period. Spreadex did not request source of funds data and the customer went on to lose £50,000 within one month.

Social responsibility failures identified

The commission also raised concerns over social responsibility failures. It offered an example of Spreadex not conducting stronger customer interaction to ensure a user who surpassed a daily deposit limit of £3,340 some 12 times in 14 days, was not suffering gambling-related harm.

Despite the high spend in this period, only four pop-up messages were sent in terms of social responsibility interactions. Spreadex did not carry out any human interactions in this case.

‘Unacceptable’ behaviour from Spreadex

Commenting on the case, John Pierce, head of enforcement at the Gambling Commission, said Spreadex’s failure to uphold AML standards, delays in necessary interventions and social responsibility weaknesses 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,” he said. “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.

“One customer, showing markers of harm, was using products across areas overseen by two different regulators. As the regulator, we stress the importance of licensees understanding and managing cross-channel usage in AML and social responsibility policies.”

Pierce said the commission worked with the Financial Conduct Authority on cases such as this. He said this is “critical” when there are concerns regarding a customer’s behaviour from an AML or social responsibility perspective.

“The ability to assess customer risk in a holistic manner is essential for effective risk management,” he said. “It is an expected practice. Effective social responsibility measures must always be in place to ensure 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.”