The Swedish Gambling Authority, Spelinspektionen, has issued guidance for licence holders which outlines ‘common risks’ and examples of how online games can be used for money laundering and terrorist financing.
Spelinspektionen also included some of its own observations on the actions that operators have previously taken to combat money laundering, emphasising that operators must assign customers a risk level when they initially open an account.
The regulator highlighted previous failings to establish defined risk levels, which subsequently made it more difficult to identify irregularities in consumer behaviour. It also noted that average household spending figures in Sweden should help inform risk levels.
The guidance read: “One of the characteristics of online gambling are large cash flows. Depending on the game, this can be carried out through a number of small transactions or larger, but fewer, transactions. To be allowed to play, customers need to register and identify themselves using e-identification or equivalent.
“This creates great opportunities for gambling companies to verify the identity of the customer. However, the use of other people’s identities has become an increasingly common feature in various money laundering schemes, which is why it is necessary to remain extra vigilant. To gamble online, the customer also needs to have a gambling account.
“All transactions made to and from the gambling account are registered. This facilitates the gambling companies’ monitoring activities. However, the gambling account itself is associated with particular risks given that it can be used for purposes other than gambling, such as for storing or transferring money.”
Monitoring of a player’s deposits or stakes, according to the regulator, could be key to identifying whether a player should be categorised as high-risk. If this occurs, Spelinspektionen added that further measures should be taken as soon as possible.
“For example, data on taxable income may be appropriate to collect for a normal-risk player while further verifications and direct contact with the customer are required to find out where the client’s money comes from if they are high-risk,” it explained.
Finally, the regulator said an effective way to reduce the risk of money laundering or terrorist financing is by only allowing “closed-loop” transactions, in which the customer is the only person who may withdraw from the account from which a deposit was made.
The report was produced and elaborated by the Swedish Gambling Authority in collaboration with the Swedish Financial Intelligence Unit and the Coordinating Body for Anti-Money Laundering and Countering Financing of Terrorism.