Danish payments provider Inpay A/S has been temporarily barred from entering new business agreements with iGaming companies following a regulatory review.
The restriction was triggered by an inspection conducted by Finanstilsynet, the Danish financial regulator, back in March of this year into Inpay’s internal anti-money laundering procedures.
Finanstilsynet concluded that it had identified “serious violations of the Money Laundering Act” during the course of that inspection, prompting swift regulatory action against the firm.
As a direct result, the financial authority moved to bar Inpay from entering any new business agreements with online gaming companies until sufficient proof of remediation is provided.
Inpay operates as a licensed e-money institution under the Danish Payments Act, specialising in international cross-border payments as an alternative to traditional SWIFT wire transfers.
The scale of the violations is notable, with Finanstilsynet confirming they concern “the majority of the company’s portfolio,” referring specifically to businesses operating within the online gaming industry.
The regulator stated that “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.”
That geographic spread raises the possibility that a significant number of those companies lack the necessary gambling licences to operate on EU soil, meaning they would not be bound by the same financial protection requirements as licensed operators.
Finanstilsynet also highlighted that failures in due diligence procedures increase the risk that Inpay could be processing funds linked to illegal gaming activities conducted by unlicensed operators with no obligation to comply with AML rules.
The cumulative effect of those due diligence gaps means the potential for money laundering and the processing of illicit funds through the payments network rises considerably.
Inpay has agreed to voluntarily suspend the creation of new business customer relationships within the online gaming sector while the situation is resolved with the regulator.
The company confirmed it “must now demonstrate to the FSA that it has rectified its violations of the Money Laundering Act” before any lifting of the restrictions can be considered.
The FSA’s targeted approach toward Inpay provides a clear example of how regulators can use licensing leverage to limit payment flows toward unregulated black market operators.
