A recent analysis of the global gaming and gambling sectors by the Financial Action Task Force (FATF) has found that land-based casinos, online casinos and sports betting platforms remain particularly exposed to money laundering risks – ahead of other forms of gambling – while the rise of illegal gaming platforms remains one of the sector’s largest concerns.
The FATF is in turn alerting countries on how to spot abuse of the gaming and gambling sectors, including criminals using gambling platforms to move money without actually gambling, making multiple small transactions (smurfing) to avoid detection and unusually large or coordinated bets on events flagged for possible competition manipulation, it said in a statement issued this week.
The analysis, which examined financial crime risks across casinos, gambling activities and video gaming over the course of a year, has identified new opportunities for criminal abuse in the gaming and gambling sectors following an increase in market size globally, a rise in the use of online platforms and as payment methods allow rapid, anonymous transactions across borders.
It also found that, while video gaming and gambling platforms share a number of structural similarities, such as cross-border customer bases and flow of funds, the evidence suggests that money laundering through gaming appears to take place on a smaller scale than through gambling.
One of the key challenges for jurisdictions today, the analysis found is the speed at which technology has allowed activity within the gaming and gambling sector to evolve across online, cross-border and multi-payment platforms, creating increasingly complex ecosystems for regulators and law enforcement. This is because activities are increasingly interconnected with the wider digital economy, providing multiple points of access to the formal financial system.
Payment systems used in gaming and gambling such as cash, e-wallets, mobile money and virtual assets are vulnerable to a range of money laundering risks, the FATF said.
Among the concerns is that criminals and illegal operators can exploit differences in regulatory approaches across jurisdictions – differences that can also create barriers to information sharing between private and public sectors and challenges in international co-operation. Similarly, beneficial ownership shareholding of platforms can be structured to bypass thresholds for regulatory checks, especially when AML/CFT controls and anti-corruption frameworks are weak.
The analysis also highlights the continued threat of criminal infiltration and exploitation of gaming and gambling operators. It notes that traditional casinos have long been exposed to efforts by organized crime groups to gain ownership or influence over operations, but these risks can be compounded in online environments with complex ownership structures.
“Without robust safeguards, these sectors can be attractive gateways for fraudsters, professional money launderers and organized criminal networks,” said FATF President Giles Thomson.
“I urge all governments to take note of the risk indicators we have set out today and put in place appropriate risk-based responses – from strengthening oversight and cracking down on illegal and offshore operators to boosting international co-operation and deepening public-private collaboration.”
The FATF’s analysis includes a series of risk indicators that highlight behavioral, transactional and operational warning signs associated with money laundering and terrorist financing across gaming and gambling activities, and that can help authorities and industry better detect and disrupt criminal abuse.
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