The online gambling industry is attractive to criminals wanting to launder the proceeds of crime.
Online gambling may also have become more attractive to criminals over the past few years as the financial sector has implemented comprehensive AML/CFT measures.
Online gambling is vulnerable to money laundering activities for various reasons, such as ease of access, cross border activity, alternative payment systems and high turnover.
The Money Laundering and Terrorist Financing (ML/TF) risks associated with online gambling include:
- The avoidance of direct involvement in the money laundering process, through the use of people unrelated to the initial criminal activity. These are known as ‘front people’ through whom gaming transactions are channelled;
- Online gaming companies can credit winnings or unused funds back to an account other than the one through which the original bet was made;
- Peer-to-peer transfer of funds between accounts;
- Significant volumes of transactions, and the need for quick processing of payments;
- Online gaming may be used as a vehicle for the laundering of money through peer-to-peer games such as e-poker;
- Fund account with large deposits, wager a minimal amount, then withdraw funds; and
- VIP rooms and high-stake gambling facilities.
Online gambling must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures as a critical first step in complying with AML/CFT laws.