Swedish Banks Halt Services to Gambling Operators

The Chief Executive of the Swedish Internet Gaming Association (BOS), Gustav Hofstede, has asserted that all significant Swedish financial institutions have ceased providing services to authorized gambling operators.

According to BOS, “all major Nordic banks,” encompassing SEB, Swedbank, Nordea, Handelsbanken, DNB Nor, and Danske Bank, halted services to Swedish licensed gambling operators at some point during this year.

Hofstede asserts that this action contravenes Swedish law and has lodged a grievance with the country’s financial watchdog, Finansinspektionen.

Hofstede stated that most banks closed accounts citing internal risk evaluations or the Swedish Anti-Money Laundering Act (PTL). The BOS Chief Executive added that “in certain instances, banks have not furnished any explanation whatsoever.”

Hofstede (pictured) stated: “To my knowledge, no specific justifications have been provided in any case to rationalize the dismissals and the bank’s assessments.”

Hofstede further stated that gambling operators cannot function without banking services.

“As previously mentioned, online gambling enterprises depend on fundamental financial infrastructure,

He clarified: “This necessitates them to have the capability to store customer funds, in addition to accepting deposits and making disbursements to customers.”

Hofstetter highlighted that the service disruption signifies that operators will no longer be able to utilize Bank-ID to authenticate players’ identities. This has deprived them of a crucial tool to combat fraud and financial crime.

“Without the Bank-ID system, online gambling enterprises need to employ alternative solutions to identify their clientele,” he elaborated. “These solutions may be ineffective for businesses and insecure for users.”

Swedish financial institutions also provide the Swish payment service, which Hofstetter indicated is also “highly significant” for operators.

Hofstetter believes that the bank’s decision deteriorates the operational environment for iGaming licensees within the nation, while simultaneously weakening the objectives of the Gambling Act.

He even contends that these actions are unlawful.

Hofstetter stated that banks have a contractual responsibility to continue providing banking services to these clients, unless there is a compelling reason to terminate the agreement. He asserts that the agreement can only be terminated if continuing to provide banking services would violate the PTL, or if the bank’s customers are engaging in inappropriate behavior.

While Hofstadter highlights that financial institutions may dissolve contracts if they suspect a client is engaged in illicit financial transactions, he stresses that the PTL explicitly states these evaluations are conducted on an individual client basis. Consequently, these assessments cannot be universally applied to a legitimate sector.

Although most members of the BOS also received notifications or termination notices from banks – all of which included ambiguous and generalized statements regarding financial crime risks within the industry – it appears evident that the dismissals were founded on general business policy decisions, not the effective implementation of the PTL.

“In this instance, the banks cannot deviate from their contractual responsibilities.”

The BOS has requested a discussion with the Financial Regulatory Authority and stated that the regulator “should conduct a supervisory examination into the banks’ management of the situation and potentially intervene with the banks.”

However, SEB – one of the banks mentioned by the BOS – maintains that it is not systematically ending relationships with gambling operators, but rather conducting individual risk assessments for each client.

“We consistently conduct individual evaluations of individual customer relationships,” SEB stated. “In the case of gambling enterprises, we generally adopt a cautious approach because the risk level is elevated, particularly concerning money laundering and financial offenses.”

Danish Bank has confirmed that they don’t have a specific prohibition on gaming companies. However, the bank stresses that they will be examining these businesses more meticulously.

Danish Bank clarified: “We will not decline to provide banking services to gaming businesses. However, we believe the gaming industry as a whole poses a higher risk, so we have created tailored screening standards to ensure businesses operate responsibly.

“If a specific gaming client fails to meet our KYC process or ESG evaluation criteria, it might ultimately result in us restricting the scope of services or declining to establish a business relationship with them.”

Previously, on April 21st, Swedish law enforcement issued a caution about the gaming industry in their “National Risk Assessment of Money Laundering and Terrorist Financing in Sweden” report, stating it has become the “highest threat level” for money laundering in the nation.

The report was compiled by the Swedish Police’s Coordination Group for Combating Money Laundering and Terrorist Financing based on their findings. The report points out that gaming companies often “encounter” the risk of being used for money laundering without their knowledge.

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