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The Swedish Gambling Authority (SGA) has fined Malta-based operator Videoslots SEK9m (€761,378) and issued it with a warning after it uncovered “serious” shortcomings in its anti-money laundering (AML) controls.
Videoslots deputy CEO Ulle Skottling said the company is “surprised by the decision” and “intends to file an appeal" against it.
In 2021, the SGA began supervising Videoslots AML controls and how it ensures sufficient knowledge of its customers. The review also covered how the operator manages its customers' risk profile and takes enhanced customer due diligence measures.
The SGA said the operator “failed in its work with customer knowledge. They have not taken sufficient measures to be able to assess the risk of their operations being used for money laundering and terrorist financing,” in a press release on Wednesday (November 1).
However, Skottling told Vixio GamblingCompliance: “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."
He claims previous fines of similar amounts “were issued in respect of a range of shortcomings in the compliance framework of operators”, whereas this decision “was made solely in respect of operational checks into the income of customers”.
Skottling also said: "The SGA’s focus on an affordability threshold of deposits negates the gambling industry’s investment in the risk-based approach required by international regulations.
"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."
In the regulator’s decision dated October 26, the operator stated the SGA’s findings and preliminary assessment of the audited customers it looked at during its investigation “do not represent the high level of regulatory compliance” it works to achieve.
The operator has also taken several steps since it received a Swedish licence in 2021 to improve its AML controls, according to the SGA decision, such as expanding its AML team, requesting more extensive documentation from high-risk customers, and hiring a new department manager and supervisor.
Since February 2022, the operator has also introduced a net deposit limit of SEK200,000 per month for each customer.
Separately, the operator has recently faced enforcement action in both the UK and the Netherlands before the SGA’s announcement.
In March 2023, Videoslots said it would challenge a pending €9.9m Dutch fine, in what would be the Netherlands Gambling Authority’s largest-ever penalty, as it accuses the regulator of “acting unlawfully”.
In June 2023, it was announced that Videoslots will pay a £2m (€2.3m) regulatory settlement over social responsibility and AML failures in the UK that included allowing a customer to deposit and lose all of their savings and estimated earnings in just six months.
