Swedish Court Reduces Penalty for iGaming Operator Videoslots Amid Compliance Failures

Significant Compliance Failures Identified

Videoslots was found guilty of failing to implement adequate customer due diligence measures, particularly for its 10 largest customers, over a period of three years. An investigation by the SGA revealed that the operator did not effectively monitor the financial situations of its customers, allowing significant discrepancies between their declared incomes and actual deposits to go unaddressed.

In some cases, Videoslots permitted continued deposits from customers even after identifying that their financial profiles did not support their gambling activity. These lapses were in direct violation of Sweden’s Money Laundering Act, which mandates that operators maintain up-to-date customer information and implement enhanced due diligence procedures when necessary.

Moreover, Videoslots was found to have failed to preserve critical documentation, complicating the ability of both the company and regulators to effectively track and mitigate potential risks.

Court Finds Systemic Issues, But Reduces Penalty

While the administrative court agreed with the SGA’s findings, it ruled that there was insufficient evidence to classify the violations as systemic. As a result, the penalty was significantly reduced, though the court maintained that the breaches were serious enough to warrant both a formal warning and a substantial financial fine.

Despite the reduction, the court stressed that the violations posed a significant risk, especially in terms of money laundering and potential terrorist financing. The operator’s failure to understand the gambling sector’s vulnerability to such illicit activities further undermined its defense, with the company’s claim that the banking sector holds primary responsibility for preventing financial crimes being dismissed as a misinterpretation of regulatory expectations.

Videoslots Implements Changes but Remains Under Scrutiny

Following the ruling, Videoslots indicated that it has taken steps to improve its risk management and compliance practices. However, the company remains under close watch by Swedish authorities, who have made it clear that future violations will not be tolerated.

The SGA emphasized that the operator must comprehensively address its previous shortcomings to avoid further sanctions or potential license revocation.

Swedish regulators have signalled a zero-tolerance approach towards similar breaches in the future.