The gambling regulator said that between November 2014 and August 2016 senior management failed to mitigate risks and have sufficient staff numbers to ensure that anti-money laundering and social responsibilities processes were effective.
As a result of slapdash practices, ten customers were able to deposit large sums of money earned through criminal activity without having the source of the funds sufficiently checked by the bookie.
William Hill trousered £1.2mln from the funds deposited by the criminals; it has been ordered to give up the £1.2mln it earned from the deposits and pay £5mln to charities supporting socially responsible causes on top of that.
Where victims of the ten customers are identified, they will be reimbursed.
"This was a systemic failing at William Hill which went on for nearly two years and today’s penalty package – which could exceed £6.2mln - reflects the seriousness of the breaches," said Neil McArthur, executive director at the Gambling Commission.
"Gambling businesses have a responsibility to ensure that they keep crime out of gambling and tackle problem gambling - and as part of that they must be constantly curious about where the money they are taking is coming from," he added.
William Hill responded to the rap over the knuckles by saying it would appoint external auditors to review the effectiveness of its anti-money laundering and social responsibility practices and procedures.
"William Hill has fully co-operated with the Commission throughout this process, introducing new and improved policies and increased levels of resourcing. We have also committed to an independent process review and will work to implement any recommendations that emerge from that review,” said Philip Bowcock, the chief executive officer of William Hill.
Shares in William Hill were up 0.3% at 324.8p in a falling market on Tuesday.