The Gambling Commission (GC) has hit Spreadex Limited with a £2m fine for anti-money laundering (AML) and social responsibility failings.
The company, which operates Spreadex.com, was investigated by the UK regulator following a compliance assessment in July 2023 that flagged the shortcomings.
The failures identified by the GC are linked to Spreadex Limited’s licence to offer casino and fixed-odds betting in the UK.
Alongside the penalty payment, Spreadex will also be subject to a third-party audit to determine whether it is now “effectively implementing its anti-money laundering and safer gambling policies”.
It was found that Spreadex’s money laundering and terrorist financing risk assessment did not take into account vital customer, product, geographic and payment risks, all of which are outlined in the GC’s Licence Conditions and Codes of Practice (LCCP) and therefore “failed to take a sufficiently risk-based approach to anti-money laundering”.
It also found that the AML policies that were in place were not stringent enough to actually prevent money laundering or terrorist financing.
Instead, Spreadex was deemed “overly reliant” on customers self-reporting their own financial position.
As a result, Spreadex customers were able to make substantial deposits without providing information regarding their respective source of funds (SOF).
The GC found that in one instance, a player was able to open an account and deposit £64,000 within a short period of time. Spreadex did not request SOF information in accordance with the risks presented and the customer went on to lose £50,000 in one month.
Spreadex also subjected customers to the same level of checks, failing to increase the scrutiny on players who made significantly larger deposits.
The failings, which occurred between September 2022 and November 2023, saw Spreadex breach paragraphs 1, 2 and 3 of licence condition 12.1.1 of the LCCP.
Additionally, Spreadex was also judged to have failed to comply with paragraph 9c of the Social Responsibility Code Provision (SRCP) section 3.4.3 on customer interaction.
The operator’s social responsibility breach stemmed from failing to take a stronger course of action after a customer had reached a daily deposit limit £3,340 12 times in 14 days.
Spreadex’s customer interaction featured four pop-up messages, with no actual human interaction to investigate if the user was suffering from any form of gambling-related harm.
This latest development marks the second time Spreadex has faced action from the GC, with the company paying a £1.3m regulatory settlement fee over AML and social responsibility failures in 2022.
John Pierce, the GC’s head of enforcement, issued an assessment of Spreadex’s latest regulatory failings.
“The conclusion of this case marks the second time Spreadex Limited has been subject to enforcement action,” Pierce explained. “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.”
He continued: “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.”
The GC acknowledged that Spreadex fully co-operated throughout the investigation.
The post GC fines Spreadex for second time over “unacceptable” AML and social responsibility failings first appeared on EGR Intel.
UK regulator hands operator £2m fine three years after first £1.3m penalty payment, with customers able to place large deposits with no source of funds checks
The post GC fines Spreadex for second time over “unacceptable” AML and social responsibility failings first appeared on EGR Intel.