Home > Legal & compliance > Smarkets fined £630,000 for AML and social responsibility failings

Smarkets fined £630,000 for AML and social responsibility failings

| By Robert Fletcher
The GB Gambling Commission has handed a £630,000 (€747,037/$769,149) fine to betting exchange Smarkets after identifying a series of anti-money laundering and social responsibility failings, including letting a player deposit a six-figure sum without appropriate checks.
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According to the regulator, Smarkets allowed customers to gamble without carrying out sufficient source-of-funds checks, while the operator was also found to have failed to identify and interact with customers at risk of experiencing harm.

Specific examples published by the Commission included one customer being allowed to deposit £395,000 during a four-month period, without appropriate source of funds checks being carried out by Smarkets.

The Commission also highlighted a case where an individual was able to transfer significant levels of funds between accounts without scrutiny or source-of-funds checks.

As such, the regulator ruled Smarkets breached licence condition 12.1.1, which concerns anti-money laundering procedures and practices. Smarkets was also found in breach of social responsibility code of practice (SRCP) 3.4.1 for customer interaction and failed to act in accordance with ordinary code provision 2.1.2, which is also related to money laundering.

The operator has also received a formal warning and will undergo an audit to ensure it is effectively implementing its anti-money laundering and social responsibility policies, procedures and controls, in line with section 117(1)(b) of the Gambling Act 2005.

“This case was identified through compliance checks and once again highlights how we will take action against gambling operators who fail their customers,” the Commission’s deputy chief executive Sarah Gardner said. 

“Our investigation into Smarkets unearthed a variety of failures where customers were put at risk of gambling harm. It was obvious that poor systems and processes were in place which contributed to these breaches, driven by the company’s failure to effectively implement its policies and controls.”

In a statement issued to iGB, Smarkets founder and chief executive Jason Trost said the business fully accepted the ruling and said it would continue to work with the regulator to further improve its processes.

“We have worked cooperatively with the Commission throughout the process and taken significant measures to implement their recommendations, investing substantially in our compliance function,” Trost said.

“We take our responsibility to have appropriate compliance policies in place extremely seriously. We will continue to work closely with the Commission and other relevant stakeholders, and will take proactive steps in order to ensure further improvement to our procedures on an ongoing basis.”

The financial penalty comes after the Commission last week also handed a £1.3m fine to online operator LeoVegas for social responsibility and anti-money laundering failings.

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