LeoVegas fined over “systematic” AML and KYC failings in Sweden

The Swedish Gambling Authority (SGA) has issued a SEK2m (£171,393) fine against LeoVegas for AML and customer due diligence breaches.

Acting on a tip off, SGA investigators reviewed the KYC process used to identify the operator’s top 15 winning players between 1 January and 30 November 2019, who deposited a combined SEK5.4m during the period.

Investigators later narrowed the review to 11 players after the SGA determined four were at a low risk of money laundering. As part of the review, the SGA examined records from the Swedish Tax Agency, as well as the operator’s records of sale.

It is understood that each LeoVegas customer file includes a fact sheet which summarises due diligence measures and verification documents obtained as part of the KYC process.

Of the 11 players in question, one was found to have had no documentation at all, while the other 10 were found to contain verification documentation stamped with dates which did not correspond to the date they were saved to the file.

“All customer documents lack information on whether LeoVegas has checked if the customers constitute a person in a politically exposed position. There is also no information to confirm if LeoVegas confirmed the source of wealth on customer deposits,” the SGA said.

The SGA also highlighted assessments made by LeoVegas which found customers posed a low risk in five cases, a low/medium risk in three cases, a medium risk in two cases and medium/high risk in one case.

Following the SGA review, LeoVegas has tightened its procedures relating to customer factsheets as well as conducting an internal review of its existing processes to ensure players are correctly flagged in terms of AML analysis.

The Malta-headquartered operator has also committed to removing certain deposit methods which are associated with a higher risk of money laundering.

LeoVegas admitted that its customer due diligence processes were insufficient in respect of two players.

The SGA suggested the firm’s assessment process incorrectly classified players as lower risk when they should have been categorised as higher risk.

“Shortcomings have been present in all 11 customer records covered by the continuous review,” the SGA said.

“It has thus not been about any one customer or an occasional flaw.

“Based on how LeoVegas has described how the documents in the customer records have been handled and updated, the deficiencies may be considered to be due to the company’s procedures.

“The shortcomings can thus also be assessed as systematic,” the regulator concluded.

Responding to the ruling, LeoVegas said: “LeoVegas is continually developing its policies to ensure compliance and had already before today’s decision changed and updated its customer due diligence routines.

“LeoVegas intends to appeal today’s decision in order to allow a court to review the matter and give the entire industry further guidance on how the current regulation is to be interpreted.

“Each year the company is subject to numerous audits and reviews by local supervisory authorities and external auditors.

“Compliance has top priority at LeoVegas and is an area that the company is continually developing in order to meet the requirements that the regulators – but also the company itself – puts on its operations.”