Danish payments provider Inpay A/S has been temporarily restricted from entering new business agreements with iGaming companies.
The restriction follows a review conducted by Finanstilsynet, the Danish financial regulator, back in March to inspect Inpay’s internal anti-money laundering procedures.
The Finanstilsynet states that it identified “serious violations of the Money Laundering Act”.
This led to the financial authority barring the payments firm from entering new business agreements with online gaming companies until Inpay sufficiently proves that the violations have been dealt with.
Inpay is licensed under the Danish Payments Act as an e-money institution, which specialises in international cross-border payments as an alternative to traditional SWIFT wire transfers.
Its customer base largely consists of businesses such as corporate entities, financial institutions, crypto enterprises, and also online gaming companies.
During the March inspection, Finanstilsynet reported that Inpay could not provide enough evidence that the required level of customer due diligence has been met when monitoring transactions within the iGaming segment of its customer base.
Some of the violations listed by Denmark’s financial authority include failure to properly identify the purpose and intended nature of the flagged business relationships, and failure to conduct proper assessments of business customers that are classified as being high risk for money laundering and terrorist financing.
“The Danish FSA assesses that the violations are serious, and the scope, type of customer, including the complexity of ownership structures and activities across many countries, are aggravating factors for how significant the violation is,” the authority added.
Of significance, Finanstilsynet noted that the violations concern “the majority of the company’s portfolio”, referring to businesses within the online gaming industry.
“These customers operate within online gaming, which is an industry with an increased risk of money laundering, and the majority are located outside Denmark and often outside the EU.”
In other words, it is possible that a large number of these companies do not have the necessary gambling licence to operate on EU soil, which would mean that they are not subject to the same rigid financial protection rules that their licensed counterparts are. Therefore, the risk of money laundering and processing of illicit funds would increase significantly.
Inpay has reportedly agreed to voluntarily cease the creation of new business customer relationships with online gaming firms until the necessary documentation proving improved AML controls is produced and presented to the Finanstilsynet.