Spreadex Hit with £2 Million Penalty for Compliance Failings
After a comprehensive review by the Gambling Commission, Spreadex faces a hefty fine and mandatory third-party audits due to lapses in anti-money laundering and social responsibility efforts.
- Spreadex ordered to pay a £2,022,000 penalty for anti-money laundering and social responsibility failings.
- This is Spreadex’s second regulatory penalty, following a £1.36m settlement in 2022.
- Failings include inadequate money laundering risk assessments and insufficient customer interactions for potential gambling harm.
- Specific cases revealed customers being allowed to deposit large sums without proper checks.
- The company will also undergo a third-party audit to ensure compliance improvements.
- The Gambling Commission warns that repeated regulatory failings will escalate enforcement action.
Spreadex, a prominent name in the spread betting market, is in the spotlight for all the wrong reasons. The Gambling Commission has slapped the firm with a staggering £2,022,000 penalty, citing severe lapses in its anti-money laundering (AML) and social responsibility protocols. The findings from a July 2023 compliance assessment highlight the company’s struggle to meet regulatory standards, marking its second financial reprimand in as many years.
A Pattern of Negligence at Spreadex
The issues at Spreadex.com run deep, with the investigation uncovering a concerning pattern of negligence. Between September 2022 and November 2023, Spreadex displayed a lackadaisical approach towards its AML obligations and the welfare of its customers, particularly those at risk of gambling harm. Some of the most glaring issues included:
- Insufficient AML Measures: The company failed to conduct adequate money laundering risk assessments, leading to inappropriate AML controls that fell short of regulatory expectations.
- Inadequate Customer Interactions: Spreadex was found to have conducted insufficient interactions with customers who showed signs of gambling-related harm. In one instance, a customer was allowed to deposit around £64,000 while losing £50,000 in just one month, all without proper source of funds checks.
- Overreliance on Automated Systems: Another instance saw a customer hitting the daily deposit limit multiple times over two weeks. Rather than engaging directly, Spreadex relied on automated pop-up messages, a response deemed insufficient given the potential harm at play.
Taking Action Against Spreadex
In response to these findings, John Pierce, the Commission’s head of enforcement, issued a stern warning. Spreadex’s repeated failures to meet its regulatory obligations are unacceptable and indicative of a broader concern within the company’s operational ethos. Unlike previous infractions, this time, the company is also required to submit to a third-party audit. This step aims to ensure that Spreadex not only rectifies its current inadequacies but also prevents future compliance issues.
This latest enforcement action coincides with Spreadex navigating through a competition probe related to its recent acquisition of Sporting Index from FDJ United. The complexities of this corporate manoeuvre are now juxtaposed against the backdrop of significant regulatory scrutiny.
A Call for Industry Improvement
As the industry watches closely, the Gambling Commission's message is clear: operational laxity, especially concerning customer welfare and anti-money laundering, will not be tolerated. Companies like Spreadex must significantly improve compliance measures or face increasingly severe consequences. The road ahead for Spreadex involves paying penalties and undergoing a fundamental transformation in how it conducts business, emphasising the importance of robust regulatory practices in safeguarding the gambling ecosystem’s integrity.
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Alfie Beeching is a recognised voice within iGaming, especially when it comes to sports betting. With his 14 years of experience from the industry and incredible knowledge about everything related to sports, he is a powerful resource for our website and our readers.
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