Spreadex Fined £2.02m for Compliance Breaches

iGaming operator Spreadex Limited has been issued a £2.02 million financial penalty by the UK Gambling Commission following a compliance investigation that identified anti-money laundering (AML) and social responsibility shortcomings.

The operator, which runs Spreadex.com and holds licences for fixed-odds betting and online casino operations, must also undergo a third-party audit to ensure it is effectively enforcing AML and safer gambling procedures. The breaches were uncovered during a regulatory assessment conducted in July 2023 and cover a period from September 2022 to November 2023.

The Commission found that Spreadex’s AML risk assessment failed to adequately address risks associated with customers, products, geography, and payment methods, as required under regulatory guidance. The investigation highlighted overreliance on self-declared customer financial information and insufficient checks on large depositors. One instance cited involved a customer who deposited approximately £64,000 over a short period and lost £50,000 within a month without a source-of-funds check being appropriately escalated.

Additionally, the Commission identified a lack of robust customer interaction protocols. In one case, a user reached a daily deposit limit of £3,340 on 12 occasions over a 14-day span. The operator issued automated pop-up warnings but did not initiate direct intervention to assess potential gambling-related harm.

This is the second regulatory enforcement action against Spreadex. In 2022, the firm paid a £1.36 million settlement for similar failures related to social responsibility and AML compliance.

John Pierce, Commission 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.”