Smarkets hit with £630,000 UKGC fine over AML and social responsibility breaches

Smarkets has agreed to pay a financial penalty of £630,000 after the UK Gambling Commission (UKGC) identified a series of failings in its anti-money laundering (AML) and social responsibility procedures.

The London-headquartered betting exchange received the fine after UKGC investigators found that customers were being allowed to gamble without adequate source of funds checks being carried out.

In addition, Smarkets was found to have failed to identify and interact with customers showing an increased risk of gambling-related harm.

Failings highlighted by the regulator include one customer being allowed to deposit £395,000 over a four-month period, without adequate source of funds checks being carried out.

In another instance, an individual customer was found to have transferred “significant” levels of funds between Smarkets accounts without any independent scrutiny from the operator and with no source of funds checks occurring.

The UKGC has issued Smarkets with a formal warning and has attached conditions to its UK licence requiring that the operator conduct an independent audit of its existing AML procedures.

In particular, this includes scrutiny to ensure Smarkets is effectively implementing its AML and social responsibility policies following the investigation by the regulator.

The audit must be completed within 12 months.

In its summary, the UKGC said that it had found no evidence of criminal spend taking place via Smarkets in the specific customers reviewed.

The UKGC also noted Smarkets’ full co-operation during the investigation, and that the operator had taken “appropriate remedial action” to address identified failings.

In a statement acknowledging the fine, Smarkets founder and CEO Jason Trost said: “We fully accept the UKGC’s findings following investigation of some of our former procedures.

“We have worked cooperatively with the Commission throughout the process and taken significant measures to implement their recommendations, investing substantially in our compliance function.

“We take our responsibility to have appropriate compliance policies in place extremely seriously.

“We will continue to work closely with the UKGC and other relevant stakeholders, and will take proactive steps in order to ensure further improvement to our procedures on an ongoing basis,” he added.

UKGC deputy CEO Sarah Gardner hailed the investigation as proof of the regulator’s resolve to prosecute offending operators.

“This case was identified through compliance checks and once again highlights how we will take action against gambling operators who fail their customers,” Gardner said.

“Our investigation into Smarkets unearthed a variety of failures where customers were put at risk of gambling harm.

“It was obvious that poor systems and processes were in place which contributed to these breaches, driven by the company’s failure to effectively implement its policies and controls,” she added.

Earlier this month, LeoVegas was fined £1.32m by the UKGC after investigators identified similar breaches in its own internal procedures.