UKGC fines Spreadex £2M over repeated compliance failures
Spreadex has been sanctioned with a £2 million fine by the UK Gambling Commission for significant breaches of anti-money laundering (AML) and social responsibility regulations, marking the second enforcement action against the company.
The transgressions were identified during a compliance review conducted in July 2023, pertaining to Spreadex’s operations under its license for casino and fixed odds betting activities in the UK. These violations occurred over a span of time from September 2022 to November 2023. Alongside the monetary penalty, Spreadex is mandated to undergo an independent audit to evaluate its adherence to AML practices and measures for promoting safer gambling.
The Gambling Commission highlighted critical shortcomings in various areas, including a deficient risk assessment framework that failed to account for essential factors such as customer behavior and payment risks. It was noted that Spreadex relied excessively on self-reported financial information, permitting substantial deposits without adequately verifying the sources of funds.
For instance, a customer deposited £64,000 and subsequently lost £50,000 within just one month, without any verification checks being conducted. The review also underscored numerous social responsibility deficits. One particular case revealed that a customer exceeded their daily deposit limit of £3,340 on 12 out of 14 days but received minimal automated alerts and no proactive engagement from the operator.
John Pierce, head of enforcement at the Gambling Commission, characterized these deficiencies in AML protocols and customer protection as “unacceptable.” Notably, Spreadex had already incurred a penalty of £1.4 million in 2022 for similar regulatory infractions.
John Pierce emphasized:
The operator displayed an inappropriate reliance on customer declarations concerning the source of their funds, instead of obtaining evidence from independent and verifiable sources as mandated. Operators are required not only to implement and sustain robust AML policies, but also to act promptly in response to any indicators of suspicious activity.
In a particular instance, one customer exhibiting signs of problem gambling engaged with products regulated by two different authorities. As the regulatory body, we emphasize the necessity for licensees to fully comprehend and manage cross-channel usage within their AML and social responsibility frameworks.
The capability to assess customer risk comprehensively is vital for effective risk management. It is expected practice for operators to implement robust social responsibility measures, ensuring that consumers identified as being at risk receive timely and appropriate interventions.
Operators must be clearly aware: failure to rectify regulatory shortcomings will lead to increasingly severe enforcement actions.
