Swedish Gaming’s Catch 21; Betting Industry Confronting Dirty Money Allegations

Amid claims that the country’s betting business is under threat from money-laundering and terrorist financing, Sweden’s online gaming industry is facing a banking embargo.

Gustaf Hoffstedt, secretary general of the Nordic nation’s Association for Online Gaming, Branscheförenigen för Onlinespel (BOS), has now called for high-level talks with the government to head off the looming crisis.

This week in an official report, titled “National Risk Assessment of Money Laundering and Terrorist Financing”, Swedish police warned that the gambling industry was at the “highest threat level” from illicit financing.

Last month the country’s Financial Police said that they had identified 700 money-laundering incidents in 2020.

Police said government casinos and online gambling verticals were particularly at risk.

Concurrently, major Scandinavian banks, among them SEB, Swedbank, Nordea, Handelsbanken, DNB Nor and Danske Bank, have now effectively embargoed Swedish betting operators, says Hoffstedt.

Claiming a breach of national law, Hoffstedt has now filed a complaint to the Finansinspektionen, the country’s Financial Supervisory Authority.

Most of the banks have cited “assessments” of potential money laundering as a precept to suspended accounts.

“[But] in some cases the banks have not stated any reason at all,” said Hoffstedt, “As far as I am aware, no concrete justification for the dismissals and banks’ assessment has been provided in any of these cases.”

And it means that iGaming firms have been caught in a classic Catch 22 situation.

Operators can’t function without banking services. And without banking services they’ve lost a vital tool, bank ID, to verify the identities of punters so that they can combat fraud and money laundering.

The banks’ draconian response was “illegal” and had only “undermined the law” and clean gambling outcomes, Hoffstedt argued.

“The Financial Supervisory Authority should initiate an investigation and possibly intervene against the banks,” he urged.

A spokesperson for SEB bank responded: “We are not systematically ending our relationships with gambling operators, but rather examining the risk for every client on an individual basis.

“When it comes to gambling companies, we generally have a cautious approach based on the raised risk level — not least connected to risks relating to money laundering and financial crime.”