The UK Gambling Commission took decisive enforcement action with its levying of a £2 million fine against Spreadex Limited. The fine underscores the huge gambling firm’s ongoing and repeated failures to comply with essential anti-money laundering (AML) and social responsibility obligations.
This marks the second time in just three years that Spreadex has been penalised. The company was fined £1.36 million in 2022 for similar breaches.
A repeat offender
Spreadex offers spread betting and fixed-odds betting services to UK consumers. But between September 2022 and November 2023, the Gambling Commission found that the company had made insufficient improvements to address previous compliance gaps. The recurrence of issues, especially around high-risk customer behaviour and lax AML controls, suggests that prior warnings and enforcement actions were not taken seriously enough at an organisational level.
At the core of the most recent failings are two critical areas: Ineffective AML practices and weak customer protection interventions. According to a July 2023 compliance assessment, Spreadex failed to adopt a risk-based approach as mandated by the Commission. This included:
- Inadequate ML/TF risk assessment that neglected key risk categories such as customer behaviour, product use, payment methods and geographic exposure.
- Over-reliance on self-declarations from customers about their financial status, without seeking corroborating evidence.
- Failure to verify source of funds even in high-risk scenarios. In one case, a customer deposited £64,000 and lost £50,000 within a month without triggering meaningful checks.
- Static and unresponsive due diligence practices that failed to scale with increasing customer risk.
Missed opportunities for intervention
Spreadex was also cited for social responsibility failings. In one example cited by the Gambling Commission, a customer hit their daily deposit limit of £3,340 not once, but 12 times in two weeks. Despite this red flag, the operator responded only with automated pop-up messages and failed to follow up with meaningful human interaction. The result? A missed opportunity to identify and mitigate potential gambling harm.
As John Pierce, head of enforcement at the Gambling Commission, stated: “Its failure to uphold anti-money laundering standards, delays in necessary interventions and weaknesses in social responsibility measures were unacceptable. Operators should be in no doubt: repeated regulatory failings will result in escalating enforcement action.”
The cost of non-compliance
In addition to the financial penalty, Spreadex must now undergo a third-party audit of its AML and safer gambling policies, procedures and controls. This not only adds to the company’s operational burden but also places its practices under a microscope. Regulatory scrutiny of this level often results in significant restructuring.
Compounding its regulatory challenges, Spreadex is also currently appealing a decision by the Competition and Markets Authority (CMA), which ordered it to sell Sporting Index, citing concerns over monopoly formation. Spreadex has argued that its acquisition benefited users, but in the context of its ongoing compliance struggles, the CMA’s position is likely to receive public and regulatory sympathy.
The key takeaways
Spreadex’s story illustrates the real risks of failing to take compliance seriously with the result here involving not only financial penalties but also reputational damage, regulatory intervention and even forced divestment.
For companies, the lessons are:
- AML must be proactive, not reactive. A risk-based approach is not optional, it’s foundational. This means escalating scrutiny in line with customer activity and red flags.
- Customer protection is more than just box-ticking. Automated messages alone won’t satisfy regulatory expectations. Genuine, timely human interventions are critical when signs of harm appear.
- Previous enforcement action is not a get-out-of-jail-free card. If anything, it raises the stakes. Regulators will come down harder on repeat offenders.
- Independent audits are not just punitive, they’re transformative. Use them as opportunities to build a culture of compliance that is sustainable and scalable.
With this second fine, the Gambling Commission has sent a clear message to the industry that enforcement is escalating and there will be less tolerance for repeat failures. Companies like Spreadex must now show that they are willing, and able, to meet the regulatory bar.
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