UKGC Sanctions Spreadex Following Regulatory Shortcomings

In July 2023, the commission conducted a compliance evaluation and discovered several concerning shortcomings. According to the regulator, they relate to Spreadex’s licence to provide fixed odds and casino betting in the United Kingdom.

The commission described the matter as occurring from September 2022 until November 2023. Spreadex will be subject to a third-party assessment in addition to the fine, which are intended to ensure that it will be putting more robust gaming and AML policies, processes, and controls in place.

This is the second time action has been taken by the UK Gambling Commission against Spreadex. Following the first infraction, the company was required to pay a £1.4 million regulatory fine for its AML and social responsibility shortcomings in August 2022.

The Gambling Commission outlined some of the AML shortcomings, stating that Spreadex’s risk assessment for money laundering and terrorism funding was inadequate. As required by regulations, the operator failed to account for “key customer, product, geographic, and payment risks”.

According to the regulator, money laundering and terrorism funding cannot be stopped by the current AML rules, processes, and controls. It pointed out that Spreadex depended too much on the self-reported financial status of its clients with players routinely being allowed to keep making significant deposits without disclosing the source of their money.

The commission highlighted one instance in which a customer created an account and made a near-instant deposit of almost £64,000. The customer then went on to lose around £50,000 in a single month as a result of Spreadex’s failure to request information regarding the source of their funds.

Failures in social responsibility were another issue brought up by the commission. It provided an example of how Spreadex failed to provide a compliant level of customer service to ensure that a user who exceeded a £3,340 daily deposit cap, roughly 12 times over the course of 14 days, was not harmed by gambling.

They noted that just four pop-up messages about social responsibility exchanges were issued throughout this time, despite the significant expenditure. Aside from these pop-up messages, Spreadex did not engage in any human-to-human contact, failing to intervene despite several warning signs being present over a prolonged period.