Spreadex Limited will pay a £2,022,000 penalty following a Gambling Commission investigation that uncovered serious anti-money laundering (AML) and social responsibility failures. The operator, which provides casino and fixed-odds betting services via Spreadex.com, in addition to Financial Trading, also faces a mandatory third-party audit to verify that its AML and safer gambling policies, procedures, and controls are now fit for purpose. This enforcement action—marking the second breach by Spreadex in just three years—underscores the regulator’s commitment to robust compliance standards and serves as a wake-up call for all UK gambling businesses.
Table of Contents
Spreadex AML Failings Exposed
A compliance assessment conducted in July 2023 revealed that Spreadex’s Money Laundering and Terrorist Financing (ML/TF) risk assessment did not account for critical customer, product, geographic, and payment risks, contravening the Commission’s guidance on adopting a risk-based approach to AML. Policies and controls intended to prevent ML/TF were deemed inadequate: Spreadex relied heavily on customers’ self-reported financial positions rather than independent verification. For instance, one customer deposited roughly £64,000 within a short period and subsequently lost £50,000 in a single month without any Source of Funds (SOF) information being requested—despite clear indicators of higher risk.
Repeatedly applying the same level of scrutiny regardless of escalating deposit amounts or gambling activity further highlighted systemic weaknesses. When a customer’s risk profile increased—evidenced by significant deposits—the operator failed to enhance due diligence, leaving it vulnerable to exploitation by money launderers. The Gambling Commission’s requirement that firms must dynamically adjust their AML measures based on evolving risk profiles is clear: licensees must not default to static controls when risk indicators intensify.
Social Responsibility Gaps at Spreadex
The investigation also found that Spreadex’s social responsibility measures fell short of regulatory expectations. A customer breached the daily deposit limit of £3,340 on twelve occasions within fourteen days—a strong indicator of potential gambling-related harm. Despite this, the operator restricted its intervention to four automated pop-up messages and neglected any human interaction to assess the customer’s wellbeing. Responsible gambling guidelines mandate that licensees must escalate from automated alerts to human engagement when harm indicators surface.
Historical context shows that Spreadex previously settled for £1.36 million in 2022 for similar failures, highlighting a troubling pattern of non-compliance. In that case, one customer deposited £1.7 million and lost £500,000 within a month without adequate intervention—despite repeated financial alerts. The repetition of such failings demonstrates the urgent need for operators to embed social responsibility and AML controls into their corporate culture, rather than treating them as mere regulatory checkboxes.
Regulatory and Legal Framework
UK gambling operators are bound by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017) and the Gambling Commission’s Licence Conditions and Codes of Practice (LCCP). The MLRs 2017 require firms to conduct comprehensive customer due diligence (CDD), ongoing monitoring, and enhanced due diligence (EDD) for high-risk scenarios. Spreadex’s failure to obtain and verify SOF information contravened both the MLRs 2017 and the Commission’s detailed guidance on risk assessments and CDD.
Under section 327 of the Proceeds of Crime Act 2002 (POCA 2002), operators commit a money-laundering offence by failing to report or by facilitating the concealment or disguise of criminal property. POCA 2002’s obligations, combined with the MLRs 2017, form the bedrock of the UK’s AML regime. Licensees must maintain a risk-based approach, adapt controls to changing risk factors, and collaborate with other regulators—such as the Financial Conduct Authority (FCA)—to ensure a holistic view of customer activity.
Assessment and Audit Requirements
To restore confidence in its compliance frameworks, Spreadex has been mandated to commission an independent third-party audit. This audit must verify that AML and safer gambling controls are fully implemented and operate effectively across all product lines, including those regulated by the FCA. John Pierce, Commission Head of Enforcement, emphasized:
“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. … Operators should be in no doubt: repeated regulatory failings will result in escalating enforcement action.” .
The audit will assess aspects such as risk-based customer due diligence, SOF verification, transaction monitoring thresholds, and the effectiveness of social responsibility interventions. Findings must be reported directly to the Gambling Commission, with any identified gaps addressed through a clear remediation plan. This requirement aligns with best practices under the FCA’s AML regime, which similarly mandates regular independent reviews for high-risk firms.
Conclusion
Spreadex’s £2,022,000 penalty and mandatory third-party audit serve as a stark reminder that robust AML and social responsibility frameworks are non-negotiable. The case highlights several key lessons for licensed operators: adopt a dynamic, risk-based AML approach; verify customer information independently; escalate social responsibility measures from automated alerts to human interactions when indicators arise; and engage in proactive dialogue with regulators. Failure to embed these practices not only invites significant financial penalties but also undermines public trust in the regulated gambling sector.
Related Links
- The Money Laundering, Terrorist Financing and Transfer of Funds Regulation 2017
- UK Gambling Commission Licence Conditions and Codes of Practice
- Financial Conduct Authority: Money Laundering Regulations
- Proceeds of Crime Act 2002 (POCA 2002)
Other FinCrime Central News About UKGC’s Steel Arm
- UKGC Slaps £375,000 Fine on Football Pools Limited for AML and Social Responsibility Failures
- UKGC Imposes £686,070 Fine on Corbett Bookmakers for AML and RG Failures
- Aspire Global to Pay £1.4M in UKGC Settlement for Serious Compliance Failures
Source: UKGC
Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.
