The Swedish Gambling Authority (SGA) has taken a stance against money laundering and petitioned the Ministry of Finance to increase the maximum penalty of the gambling operators in violation of the Money Laundering Act.
The Authority argued that, given the turnover of the larger gambling operators licensed in Sweden, the current maximum penalty of SEK 10 million (€1m) is too low to dissuade them from breaking the Act. The 10 largest licensed companies reportedly had a turnover of between SEK 173 million (€17.3m) and SEK 3.5 billion (€350m) during the first three quarters of 2019, as reported by Lånapengar.com.
The petition made by the SGA is that the maximum penalty fee for licensed gambling operators breaking the Money Laundering Act, should be increased from €1m to 10 per cent of the business’s revenue in the last financial year. This would be the same amount as for violating the Gambling Act issued in 2018.
The market for online gambling is an ever-growing industry in Sweden. According to SGA the regulated market generated a net revenue of SEK 17.9 billion (€1.79bn) during the first three quarters of 2019, compared to SEK 16.7 billion in 2018.
A majority of the Swedish-licensed online gambling operators are based in Malta, the origin of regulated online gaming. Mainly due to the iGaming ecosystem, with its industry-specific talent and infrastructure, that exists in Malta.
The gaming industry is the third-largest sector in the Maltese economy, accounting for 13.2 per cent of its overall economic activity in 2018. The industry is estimated to have generated €1.4 million and accounted for 9,850 jobs, directly and indirectly.
The online gambling industry is inherently vulnerable to money laundering, with the amount of cash flowing through sportsbooks and online casinos every day.
A money launderer can deposit a large amount of money into a betting account, place a few small bets for appearances’ sake and then withdraw the entire amount. This transforms the money obtained through illegal activities into ‘clean’ money.
The Money Laundering Act ensures that the gambling operators take the necessary steps to address this threat, which is why it is important to create good incentives to uphold it. The increase in penalty would, as argued by the SGA, make the fines more “effective, proportionate and dissuasive” in accordance with the Act.
Some operators are of the opinion that the penalty should not be based on turnover, but rather on the company’s earnings after winnings have been paid out. If the Ministry of Finance accepts the proposal, this will be a hard blow for the violators.
On January 13 the authority also launched a new system for licensed operators to report suspected money laundering, which will replace the old system in March.