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Swedish regulator outlines licensees’ AML obligations

| By Richard Mulligan
Sweden’s gaming regulator has published new guidelines for online gaming operators on how to counter money laundering and terrorist financing in response to a request for clarity from the sector.

Spelinspektionen has issued summaries of the risks of financial crime, relevant law, operators’ obligations and best practice in the document.

“The gaming industry is a risk area for money laundering and we have seen a need for clarification and guidance in this area. This guide will lead to an increased understanding of what is expected of licensees in the Swedish market,” said Spelinspektionen chief executive Camilla Rosenberg.

According to the guidelines, the licensee must carry out a risk assessment of their own operations and have risk-based internal procedures for action against monetary laundry and terrorist financing. The risk assessment must be reviewed and updated continuously to ensure it remains current and accurate. The Money Laundering Act requires that licensees take risk-based measures to prevent the company from being used for money laundering and terrorist financing. Resources should be used primarily where the risk of money laundering and terrorist financing is largest.

Licensees must have internal routines and procedures in place for action against financial crime, including measures for customer awareness and monitoring and reporting.

Training should ensure that staff have adequate knowledge of licensee routines and guidelines. This education must be adapted to its employees’ duties and responsibilities as well as the licensee’s general risk assessment.

Know-Your-Customer (KYC) standards should ensure that the identity of all account holders are verified by e-identification. Operators must collect relevant information to assess the risk of a particular customer and detect deviations from expected behaviour. Spelinspektionen said that when the risk is justified, the licensee should find out information about the customer’s financial situation.

Spelinspektionen’s guidelines suggest customers who deposit up to €2,000 during a rolling 12-month period can be considered as low risk. Those who deposit more than this, but with no other AML risk indicators, may be considered normal risk. Circumstances indicating high risk include unusual or irrational game patterns, unusually large transactions, unwillingness to respond to customer knowledge issues or to submit documentation that proves the money origin.

The body said: “The Swedish Gaming Inspectorate considers that in general it would be advantageous if the licensees asked more questions when registering new customers. Licensees’ issues should focus on the origin of future deposits and through such questions, licensees learn to know their customers better already at the on-boarding.

“An effective way to reduce the risk of money laundering and financing of terrorism can be to apply so-called closed loop transactions, which means that the customer only has the opportunity to withdraw money to the account that the deposit was made from.”

To adhere to Money Laundering Act requirements, licensees should collect documents and information concerning customer knowledge, transaction information carried out within a commercial connection and individual transactions covered by the requirement for customer judgment.

According to the Money Laundering Act, operators are obliged to review and report suspicious transactions. If the suspicion remains after initial analysis the licensee must report the case to the Financial Police.

Last month, William Hill-owned operator Mr Green was issued with two separate warnings and penalty fees totalling SEK31.5m (£2.6m/€3.1m/$3.6m) from Spelinspektionen in relation to KYC, AML and responsible gambling failures.

Spelinspektionen issued the operator with a SEK30m penalty relating to failures in its duty of care with regards to responsible gambling, and a further warning and SEK1.5m penalty for failures in its anti-money laundering (AML) and know your customer (KYC) responsibilities.

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