BOS Introduces AML Checklist Amid Operators Fighting Challenges

The Swedish Trade Association for Online Gambling (Branschföreningen för Onlinespe, BOS) which represents gambling companies and game developers that target domestic consumers has launched a comprehensive anti-money laundering (AML) checklist to support industry compliance and combat money laundering risks. 

This initiative comes amid increasing frustration among operators, sparked by unclear guidance from the Swedish Gambling Authority (SGA), tasked with ensuring the “legality, safety and reliability” of the gaming and gambling market in the country.

Operators also mentioned the significant customer pushback recorded during the Know Your Customer (KYC) process, as outlined in a new report by the leading governance, risk, and compliance experts at Advisense.

The BOS-commissioned report highlighted the challenges operators face, including difficult ties with banks and in-house problems, including the use of outdated systems and insufficient expertise among their teams.

At the start of November, industry representatives also voiced their criticism of the government’s low channelization rates and lack of enforcement against black market operators.

BOS’ Gustaf Hoffstedt: “We All Win from That”

Gustaf Hoffstedt, BOS’s secretary general, stressed the importance of collaboration across the sector: “We present our report and checklist completely openly so that even a gambling company that is not a member of BOS can use the material, if they so wish. We all win from that.”

The BOS-crafted AML checklist provides a transparent and easy-to-follow framework for AML compliance, reiterating the critical importance of risk assessments, customer due diligence (CDD), as well as enhanced due diligence (EDD) policies. 

Additionally, the checklist highlights ways to establish whistleblowing channels and preserve comprehensive records of customers’ documents.

Regulatory Ambiguity Must Go

Despite these efforts, the broader landscape is marred by regulatory uncertainty. 

According to the Advisense report, which incorporates feedback from BOS members, operators have expressed discontent regarding SGA’s inconsistent guidelines. 

The authority’s directives are often considered both rigid and ambiguous, making it difficult for operators to create robust compliance strategies based on risk. 

At the same time, customer reluctance to comply with KYC requests has also emerged as a significant obstacle, with abandonment rates soaring as high as 90% when enhanced due diligence is required.

The growing influence of cryptocurrencies also represents a distinct type of challenge for the gambling sector in Sweden. 

While operators acknowledge the risks associated with digital currencies, the report suggests that abandoning crypto payments entirely would undermine their competitive edge.

“There Must Be Room for Improvement”

Respondents voiced concerns about being pushed toward “checkbox compliance,” rather than having the flexibility to implement comprehensive risk management practices.

As one operator noted, the SGA must decide whether they want “a risk-based approach or something else” while also establishing “a framework within which operators can work risk-based and have an open dialogue without fear of repercussions.” 

The same operator voiced: “There must be room for improvement!”

Banks, Criticized for Adopting “De-Risking” Approach

Another major issue is the strained relationship between operators and banks, mostly caused by the difficulty at which operators communicate their compliance efforts to financial institutions. 

The former have accused banks of embracing the “de-risking” approach without showing any “genuine” interest in whether companies manage their risks or not. 

“They are moving toward de-risking regardless,” one operator commented.

The report lobbies for more cooperation among regulators, banks, and gambling operators, suggesting the SGA should adopt a more detail-based methodology resembling the Danish Gambling Authority’s guide on AML processes, which counts 89 pages. 

A more unified approach that would also include the creation of a dedicated AML task force to promote better collaboration between law enforcement bodies and industry representatives has also been suggested by the same report. 

One year ago, BOS addressed the proposed changes to the Money Laundering Act put forward by the country’s Ministry of Finance with the purpose of boosting penalty fees for certain violations. At the end of May, BOS warned that the announced tax increase could trigger a rise in the number of problem gamblers, as per a report produced by Copenhagen Economics.