Sweden Says Kindred Group Subsidiary Took Inadequate Due Diligence Steps

Spooniker took insufficient steps to assess the risk of its services being used for money laundering and financing terrorism, according to the Swedish Gaming Authority (SGA).
Sweden Says Kindred Group Subsidiary Took Inadequate Due Diligence Steps
November 24, 2022

Regulators in Sweden issued a warning and a $1 million fine to Kindred Group, after determining one of its subsidiaries had fallen short of meeting their regulatory standards.

Kindred offers online poker and casino gaming in Europe under its Unibet brand, which is live in Belgium, Denmark, Estonia, France, Italy, Romania, Sweden, the Netherlands, and the UK.

On November 17, the Swedish Gaming Authority (SGA), aka Spelinspektionen, warned Kindred that its wholly owned subsidiary, Spooniker, had run afoul of the regulator’s Enhanced Due Diligence requirements. SGA also alleged Spooniker had not taken sufficient steps to assess the risk of its services being used for money laundering and financing terrorism.

SGA made a formal announcement of the warning and fine on Wednesday. In a separate statement, Kindred said it was considering an appeal of both.

According to SGA’s complaint, the regulator looked at customer data on Spooniker at various points between January 2019 and February 2022. Specifically, investigators audited customers who made the largest number of deposits and had accounts with the highest opening balances.

SGA said its warning and a fine of 1 million Swedish kronor (SEK), the equivalent of $1 million USD, were justified based upon its findings from 10 customer cards selected at random.

“Spelinspektionen considers Spooniker’s in-depth customer knowledge of the [ten] customers has been insufficient,” SGA said.

“Spooniker has not taken adequate in-depth customer due diligence measures in a timely manner and has thus not been able to assess the risk of being exposed to money laundering. Spooniker would therefore not have maintained the business relationship of these customers.”

In a statement Wednesday, Kindred said it “fully shares the SGA’s ambition to prevent money laundering and terrorist financing. Anti-money laundering [AML] is a priority in Kindred’s compliance and sustainability framework.”

But the company also pushed back a little on the regulator. “Kindred would welcome increased clarity from the SGA and the legislation on what objective and effective AML risk parameters should be to consider when assessing a customer’s risk profile.”

Kindred said that since 2021, it had made several improvements to strengthen its processes, including:

  • Improving the company’s AML procedures, which included strengthening their Enhanced Due Diligence procedures — the crux of what got Kindred in hot water with the SGA in the first place. As an example, Kindred said customers considered high risk would be required to submit bank statements, and that failure to comply would result in account closure and generation of a Suspicious Transaction Report (STR), which would be submitted to the financial police, if deemed appropriate
  • Introducing “financial indicators and backstops” based on recurring income for customers classified as high risk
  • Implementing what Kindred described as “extended and thorough customer risk assessments, entailing detailed transaction and gameplay review, as well as review of product risk, affordability risk, and risks related to payment methods used”
  • Increasing the number of STRs and risk-assessed customers it sends to Sweden’s financial police
  • Expanding the number of employees working on AML to ensure the tightened standards “identify and manage customer risk,” according to Kindred

“Kindred also takes note of the SGA’s view that improved processes have been put in place since the investigation took place and that these are now compliant,” the company said.

Outside of Europe, Unibet is live in Australia and North America — with online casino and sports betting in Ontario, plus sports betting only in Arizona, Indiana, New Jersey, Pennsylvania, and Virginia. Unibet exited sports betting in Iowa in Q4 2022.

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