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The Financial Action Task Force (FATF) has issued a warning that the fast pace development of online gaming, online payment systems, and cross-border platforms has created new money laundering dangers for the international gaming industry.
Casinos and sports betting remain very vulnerable to money laundering practices, states the international watchdog from Paris. Its recently published report, titled Risks of Gaming and Gambling, examines how the sector has become part of a wider value-transfer ecosystem involving many participants.
In fact, some of these parties may be working outside the regulatory frameworks of their countries’ AML/CFT regimes. In such cases, the detection of money flows and suspicious transactions becomes more complicated for the authorities.
The research is based on the answers to the questionnaires of 80 jurisdictions of the FATF Global Network. It also included consultations with industry bodies, researchers, and private-sector stakeholders, alongside case studies submitted by national authorities.
Casinos and Sports Betting Remain Exposed
FATF concluded that money laundering through gambling remains an established risk in many jurisdictions. The report identified land-based casinos, online casinos, and sports betting as sectors that remain especially vulnerable.
Online video and mobile gaming appeared to involve money laundering on a smaller scale, or with lower sophistication and frequency, based on the evidence currently available to FATF. However, the organisation noted that the wider digital environment is creating more ways for criminal activity to be connected with gaming and gambling platforms.
Online operators now accept a growing range of payment methods. FATF stated that cash, e-wallets, mobile money, and virtual assets can all be exposed to different money-laundering risks when used in gaming and gambling activity.
The availability of different payment options can allow fast, anonymous, and cross-border transactions. It can also make it easier to convert value from 1 form into another, increasing the complexity of tracing the movement of funds.
Offshore Gambling and Junket Risks
Illegal and unlicensed offshore gambling was identified as a significant risk in the report. FATF noted that the illegal gambling market can match or even exceed the legal market in some countries.
This is done via marketing and enhanced secrecy on the part of such ventures. This makes such offshore facilities harder for regulatory and law enforcement agencies to keep tabs on.
Junkets also remain under FATF’s attention. Although the segment is declining and facing stricter regulation, the organisation said junkets still present risks connected to player anonymity and unclear beneficial ownership of the junket operator.
The report also highlighted that online gaming and gambling platforms are becoming more connected with social media and other digital platforms. These channels can be used to communicate and coordinate illegal activity, advertise illegal or unlicensed gambling, recruit money mules, and facilitate competition manipulation.
Warning Signs for Operators
FATF identified a number of red flags that could point to elevated AML risks. These include complicated and often cross-border ownership structures that make beneficial ownership difficult to identify.
The report also raised concerns about nominees, trusts, foundations, and shareholding arrangements that may be designed to avoid regulatory-check thresholds. Other potential warning signs include the use of third-party providers or white-label arrangements without strong oversight.
Contracts involving software, marketing, consultancy, or technology providers that appear to lack a clear commercial or economic purpose were also identified as potential risk indicators.
At the customer level, FATF noted that multiple accounts, repeated use of virtual private networks, differences between customer and payment information, unexplained sources of wealth, and transactions involving higher-risk jurisdictions may require closer review.
Payment-related warning signs include multiple payment methods under different names, deposits followed by withdrawals with little or no play, third-party deposits, quick withdrawals to different beneficiaries, and transactions involving virtual assets.
Source: GGR Asia
