LeoVegas fined for 'systematic' AML and KYC violations in Sweden

The Swedish Gaming Authority (SGA) fined LeoVegas SEK 2m (£171,393) for AML and customer verification violations.

Acting on a tip, SGA investigators analyzed the KYC process used to identify the top 15 winning players between January 1 and November 30, 2019, who collectively contributed SEK 5.4 million during that period.

Investigators later narrowed the review down to 11 players after the SGA determined that four of them had a low risk of money laundering. As part of the review, the SGA examined the records of the Swedish Tax Authority, as well as the sales records of the operator.

Each LeoVegas customer file is intended to include a fact sheet that summarizes the due diligence and verification documents obtained through the KYC process.

Of the 11 players considered, one was found to have no documentation at all, and the other 10 were found to have supporting documentation with date stamps that did not match the date they were saved to file.

“All client documents are missing information about whether LeoVegas verified whether clients are a politically exposed person. There is also no information to confirm whether LeoVegas has confirmed the source of wealth in client deposits,” the SGA said in a statement.

The SGA also highlighted the assessments conducted by LeoVegas, which showed that clients pose low risk on five occasions, low/medium risk on three occasions, medium risk on two occasions, and medium/high risk on one occasion.

Following the SGA review, LeoVegas tightened up its customer newsletter procedures and also conducted an internal review of its existing processes to ensure players are properly labeled in terms of AML analysis.

The Malta-headquartered operator has also committed to removing certain deposit methods that carry a higher risk of money laundering.

LeoVegas acknowledged that its due diligence procedures for the two players were insufficient.

The SGA suggested that the firm's evaluation process incorrectly categorized players as lower risk players when they should have been categorized as higher risk.

"Deficiencies were present in all 11 customer records included in the ongoing review," the SGA said in a statement.

“So it wasn't about any one client or a random mistake.

“Based on the way LeoVegas described how the documents in customer records were processed and updated, it can be assumed that the shortcomings are related to the company's procedures.

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

Responding to the decision, LeoVegas said: “LeoVegas is constantly evolving its compliance policies and has changed and updated its customer due diligence procedures prior to today's decision.

“LeoVegas intends to appeal today's decision to allow the court to consider this matter and provide the entire industry with further guidance on how the current ruling should be interpreted.

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

“Regulatory compliance is a top priority for LeoVegas and is an area the company is constantly evolving to meet the demands that regulators, but also the company itself, place on its operations.”