An investigation was launched into the operator’s processes after police revealed three individuals had spent stolen money with the company.
It revealed Gamesys failed to comply with money laundering regulations between 2014 and 2016, including not establishing the customers’ source of funds.
Leon Earp, MLRO and Director at Gamesys, said: "We acknowledge and fully accept the findings of the Commission in regard to these historic cases from 2014 to 2016.
"Since that period we have significantly improved our risk assessment procedures and made extensive investments in resources, tools and training, all of which enable us to better understand and support our customers, and keep crime out of gambling."
As part of the settlement, Gamesys will return £460,472 of stolen money to victims and pay £690,000 as a financial penalty.
Richard Watson, Gambling Commission Executive Director, said: "It is vital operators understand customers, track their online gambling and step in quickly when they suspect someone is suffering from gambling harm.
"Gamesys’ approach resulted in a variety of failings and saw stolen money flowing through the business – with customers being put at risk of gambling-related harm."
Gamesys has recently partnered with Virgin and SBTech to launch the Virgin Bet sportsbook.
