Online gambling firm Betway has been fined £11.6m, the largest ever penalty to be meted out by the Gambling Commission.

The record fine was handed down by the commission over "a series of social responsibility and money laundering failings linked to dealings with seven of its high spending customers", it said. 

The commission said that the gambling firm had failed to adequately check the source of customer funds, allowing £5.8m of money suspected to be the result of criminal activity to flow through the business.

Richard Watson, Executive Director at the Gambling Commission, said: "The actions of Betway suggest there was little regard for the welfare of its VIP customers or the impact on those around them."

Mr Watson said the case pointed to the need for change in the way that gambling firms handle customers, particularly 'high value' customers.

He said: "As part of our ongoing programme of work to make gambling safer we are pushing the industry to make rapid progress on the areas that we consider will have the most significant impact to protect consumers.

"The treatment and handling of high value customers is a significant piece of that work and operators are in no doubt about the need to tackle the issue at speed.

"We have set tight deadlines for when we expect to see progress and if we do not see the right results then we will have no choice but to take further action. This case highlights again why progress needs to be made."

Following the investigation, Betway is to pay £5.8m towards the commission's work to reduce gambling harm, and a further £5.8m to the victims of customers suspected to have obtained the money they gambled by illegal means. 

CEO, Anthony Werkman, said: "Betway takes full responsibility for the small number of historic cases which have led to this settlement. We have fully cooperated with the investigation and will take further proactive steps to ensure all recommendations and findings are implemented."

Welcoming the penalty, Christian Action Research and Education (CARE) said it was a sign that the current regulations are "not working". 

CARE spokesman James Mildred welcomed the "tough line" taken by the commission but said there were wider challenges in the betting industry that still need to be addressed. 

"It is absolutely right that [the commission] should be cracking down on the sort of malpractice evidenced by Betway," he said. 

"To have failed to do checks on high spending customers is highly irresponsible and alongside the other failures to prevent money laundering and problem gambling, it makes the fine entirely justified.

"This story speaks to the wider challenge in that we have a betting industry that has got used to a lack of regulation. Meanwhile, there is a lack of support for those with gambling related harms.

"A major part of why we are in this situation is that the current laws on gambling in England and Wales are simply not working." 

He added that the review of the 2005 Gambling Act promised by the government must "pave the way for genuine reform" of the gambling industry. 

"We look forward to engaging with that review, as soon as it is launched and will be making the case for new laws that prioritise protecting people from gambling related harms," he said.