Spreadex Fined Again By Gambling Commission
The Gambling Commission (UKGC) has told Spreadex to pay a £2 million fine over social responsibility and money laundering failures.
Spreadex will have to pay a £2 million fine to the UKGC. © Ibrahim Rifath, Unsplash
Key Facts:
- Spreadex will also have to undergo a third-party audit
- Issues were uncovered in a 2023 compliance check by UKGC
- Failings relate to its Gambling Commission licence to offer casino and fixed odds betting
- Spreadex also offers users a chance to try spread betting
Spreadex was found during a compliance audit carried out in July 2023 to be failing in a number of key areas.
This is the second time Spreadex has received such a fine after it was ordered to pay a £1.36 million regulatory settlement for social responsibility and anti-money laundering failures in 2022.
The betting brand offers a fixed-odds sportsbook alongside spread betting markets.
Spreadex was found to have repeated the same checks on the site’s customers without stepping up the levels of scrutiny when their risk level increased due to significantly larger deposits or gambling activity.
One customer hit a daily deposit limit of £3,340 12 times over a period of 14 days but did not have checks carried out to ensure they were not potentially suffering gambling-related harm.
Managing Cross-Channel Usage
UKGC’s head of enforcement, John Pierce, said it was “unacceptable” that Spreadex had been found to have such failings for the second time.
Pierce highlighted problems caused by Spreadex offering different products – spread betting and fixed-odds sports markets – that are checked over by two different regulators.
He said in a UKGC statement: “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.”
Pierce noted UKGC collaborated with the Financial Conduct Authority on the investigation.
He added: “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.”
Source Of Funds Information
UKGC found Spreadex’s anti-money laundering policies, procedures and controls were not appropriate to prevent problems.
The regulator said Spreadex relied too closely on customers’ self-reported financial position and did not require them to provide any source of funds (SOF) information to the company.
Spreadex was also found to have allowed one of its new customers to open an account and deposit in the region of £64,000 within a short period of time
The company did not request SOF information and the customer went on to lose around £50,000 within one month of registering for an account on the site.
Spreadex’s money laundering and terrorist financing risk assessment also failed to consider key customer, product, geographic and payment risks as detailed in UKGC guidance.
