FSB says it has made significant changes to its practices after reaching a settlement of £600,000 ($741,324) with the Gambling Commission.
An investigation found FSB guilty of advertising, money laundering and social responsibility failings.
While the sportsbook solutions had contractual arrangements in place with white-label partners, it was deemed it didn’t take sufficient action to ensure those partners were following license conditions.
This included not having enough oversite of three third-party sites, or effective AML and social responsibility policies in place between January 2017 and August 2019.
Bad practices included ineffective customer interactions and source of funds checks, sending a marketing email to 2,324 previously self-excluded customers and the placement of an inappropriate banner advert featuring cartoon nudity on a site that breached copyright.
An FSB statement sent to Gambling Insider said: "Following the investigation, FSB implemented a series of significant improvements to AML, customer interactions, safer gambling and due diligence processes.
"As a result of these changes, FSB is able to meet the high standards set by the Gambling Commission across all areas of the business."
The Gambling Commission has also warned fellow gambling businesses they too will face regulatory action if they don’t carefully manage third-party websites.