SGA slaps Videoslots with SEK9m fine for money laundering failings

The Swedish Gambling Authority (SGA) has issued a warning and SEK9m (£665,154) fine to Videoslots for anti-money laundering violations.

According to the regulator, following an investigation, the firm failed to take sufficient measures to assess players potentially using accounts for money laundering and terrorist financing, leading to a warning and hefty fine.

On 2 November 2021, the SGA began supervising Videoslots to see how it complied with the money laundering regulations.

The SGA asked the operator for the 30 players who made the highest number of deposits between 1 January to 31 March 2020 and 1 January to March 2021.

The regulator also required the accounts for the 50 customers with the largest total deposits in the same time frame, as well as for 100 accounts that had the highest opening balances on 1 January 2019, 2020 and 2021, respectively.

The SGA then randomly selected 10 players from the first two lists, with an additional two from the highest opening balance category, taking the total number of accounts to be investigated to 12.

In one case, a player had been a customer since 1 January 2019 and had deposited a total of around SEK5.5m between 16 January 2019 and 19 September 2021, with around 1,800 deposits being made.

A note was made on the account on 25 June 2019 of potential money laundering and it was established three days later that the customer’s income during 2018 was just under SEK57,000. Despite this, the customer had deposited SEK1.2m between 1 January to 25 June 2019.

Videoslots requested documentation from the player on 1 July 2019. However, no documents were sent in the proceeding 30-day period, forcing the firm to block the account on 1 August 2019.

Despite this, the account was reopened on 20 August, with Videoslots citing “business decisions”, with the account placed on a weekly follow-up list.

Over the next two years, the player continued to make high deposits of SEK82,000 in 2020 and in 2021 their income was SEK59,000.

Other cases had similar results. In one instance a player deposited SEK3.1m between 2 January 2019 to 31 December 2021,e across approximately 2,650 separate deposits.

The account was reviewed for the first time on 1 September 2019, with the decision to implement monthly follow-ups to monitor the activity.

Alarms went off in 2020 for high deposits while notes were made on the customer regarding previous wins. However, a Videoslots report stated the player had played “within their affordable limits” despite the spike.

On 2 November 2021, another income check was made and from the notes on the customer, the player was “within his limits for affordability” based on their 2020 income – that figure was SEK608,000.

In its summative assessment, the regulator noted that Videoslots had “not worked sufficiently proactively and risk-based” in regard to customer knowledge.

The SGA added: “Videoslots has not taken adequate enhanced customer awareness measures quickly enough and thus have not been able to assess the risk of being exposed to money laundering.”

The SGA also noted that a warning and SEK9m was a fair assessment in that despite the operator providing information as requested, Videoslots had not “independently brought forward important information that the SGA did not already have”.

In a statement provided to EGR, a Videoslots spokesperson said the company was “surprised” by the decision and that it intends to appeal the decision.

The spokesperson said: “Videoslots is grateful that the SGA has noted the improvements carried out by it since the alleged shortcomings were deemed to exist. However, Videoslots is surprised by the decision.

“The company has proactively put forward important information concerning circumstantial and temporary operational issues in the implementation of its compliance framework, and does not agree with the SGA’s view that shortcomings were systemic.

“Unlike loss remaining after withdrawals, deposits do not impact on affordable spending. Many deposits originate from winnings and withdrawals, one of the most reliable sources of player income.

“The SGA’s focus ignores the significance of minimised gambling loss and other risk indicators used to identify the layering of potentially tainted funds placed with financial services licensees. It also ignores the importance of the duty of care where loss is high.”