The Gambling Commission continues to show its teeth in Great Britain, as spread betting operator Spreadex has been ordered to pay a £1.4m settlement for AML and social responsibility failures.
Spreadex offers a combination of online casino, fixed-odds sports betting, sports spread betting and financial spread betting, for which it is regulated by both the Gambling Commission and the Financial Conduct Authority (FCA).
“Whilst it is disappointing to see anti-money laundering and social responsibility breaches occur despite our extensive published cases highlighting similar failures, we note the swift and robust action the licensee took to bring itself back to compliance,” said Leanne Oxley, director of enforcement and intelligence at the Gambling Commission.
“We expect similar commitment and engagement across the gambling sector,” she added.
Failures were identified by the Gambling Commission after a regulatory review beginning in June 2021, following concerns identified during a compliance assessment in May 2021.
The review found that Spreadex had breached licence conditions relating to social responsibility and AML requirements between January 2020 and May 2021.
Social responsibility failures included allowing one customer to deposit £1.7m and lose £500,000 during the course of a one-month period. While interactions took place with the customer, the Gambling Commission assessed that the situation had not been sufficiently evaluated and that the operator did not consider the effectiveness of restricting the account.
Other general failures relating to social responsibility regulations included having ineffective financial alerts, which allowed customers to lose significant amounts over short periods of time, as well as having an over-reliance on such alerts to identify customers at risk of experiencing harm.
Customer interactions were also not sufficiently recorded and evaluated by the business, the Commission said.
Gambling Commission director of enforcement and intelligence Leanne Oxley: “Whilst it is disappointing to see anti-money laundering and social responsibility breaches occur despite our extensive published cases highlighting similar failures, we note the swift and robust action the licensee took to bring itself back to compliance.”
Anti-money laundering failures, meanwhile, included increasing a customer’s financial deposit alert from £25,000 to £100,000 based on a self-declaration of income and an open source check.
Another customer was able to deposit £365,000 and lose £284,000 over a three-month period without source of funds being sufficiently established, while another customer who provided redacted bank statements in response to a request for proof of source of funds was also allowed to continue making deposits.
The Commission clarified, however, that following its review of the specific customers identified during its compliance assessment it found no evidence of criminal spend with the licensee.
Spreadex’s £1.4m settlement will be paid in lieu of a financial penalty, and directed towards socially responsible purposes.
Mitigating factors in the regulator’s decision included that Spreadex “showed insight into the seriousness of the breaches and self-suspended its casino actives for five months to mitigate risk,” while the operator also provided an action plan immediately following the compliance assessment and took effective action to expand and improve its compliance efforts.
The business and its senior managers also cooperated with the Commission in a timely and transparent manner, and made an early offer of a regulatory settlement, the Commission added.
In December last year, it was revealed that the Gambling Commission had enforced a record £32m in regulatory settlements during the 2020-21 year.
Settlements issued in the 2022 calendar year already dwarf that figure, as the Commission has issued a series of high-profile regulatory settlements and fines to major operators since January.
Last week on 17 August, the Commission issued Entain with a record £17m settlement relating to social responsibility and AML failures across both its online and land-based divisions.
888 also faced a £9.4m fine in March, while National Lottery operator Camelot was forced to pay £3.2m for a series of failures relating to its mobile app.
Back in January, the Commission demanded £3.8m from Genesis Global relating to AML and social responsibility failures, while Sky Betting and Gaming and LeoVegas have been ordered to pay £1.2m and £1.3m this year, respectively.