British Gambling Commission hands £2m fine to Spreadex
The regulator detected AML and social responsibility failings related to sports betting and online casino offerings.
UK.- The British Gambling Commission has announced that it has fined Spreadex Limited £2,022,000 for anti-money laundering (AML) and social responsibility failings. The company, which operates the financial spread betting and sports betting site Spreadex.com, will also have to undergo a third-party audit to ensure it is effectively implementing policies, procedures and controls.
The regulatory breaches occurred between September 2022 and November 2023 and were discovered in a compliance assessment conducted in July 2023. The Gambling Commission say they relate to the operator’s licence to offer casino and fixed odds betting.
The regulator found that Spreadex’s AML and terrorist financing risk assessment failed to consider key customer, product, geographic and payment risks and to take a sufficiently risk-based approach. AML policies, procedures and controls were not appropriate and were overly reliant on customers’ self-reported financial position. As a result, customers were able to continue depositing substantial amounts of money without providing adequate source of funds (SOF) information in line with the risks present.
The Gambling Commission cited the example of a customer who opened an account and deposited around £64,000 within a short period of time. The customer went on to lose £50,000 within one month without Spreadex requesting SOF information in line with the risks present. The regulator said Spreadex repeated the same checks on customers without increasing the level of scrutiny when a customer’s risk increased due to significantly larger deposits or gambling activity.
The operator was also found to have committed a social responsibility failure by not conducting a stronger form of customer interaction in the case of a customer who hit a daily deposit limit of £3,340 12 times in 14 days. The Gambling Commission said the Spreadex took insufficient steps to check that the player was not potentially suffering gambling related harm since its social responsibility interactions were limited to four pop-up messages and did not include human interactions.
It’s the second time the operator has faced the wrath of the British regulator. In 2022, Spreadex was fined £1.36m, again for social responsibility and anti-money laundering failures.
Attention to “areas overseen by two different regulators”
John Pierce, the Gambling Commission’s 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.”
Last year, the UK Competition and Markets Authority (CMA) concluded that Spreadex must sell Sporting Index a year after it bought the business from Sporting Group Holding due to the impact on market competition.
