THE Paris-based Financial Action Task Force (FATF) has identified red-flag indicators to guide regulators in monitoring suspicious money transactions in gambling operations.
FATF in a recently-published report titled ‘Risks of Gaming and Gambling’ said that gaming and gambling ‘had become part of a broader, interconnected value-transfer ecosystem involving numerous participants, some of which sit outside national anti-money laundering [AML] and counter-terrorist financing [CFT] frameworks.’
Rapid expansion of online gambling, digital payments and cross-border platforms is changing the illicit-finance risks facing the global gaming industry, with casinos and sports betting remaining particularly exposed to money laundering, FATF said in the report.
A report published in the gaming online daily newsletter GGRAsia said the red flags identified by the anti-money laundering watchdog include:
‘Complex-and often cross-border-platform ownership structures that obscure beneficial ownership, as well as the use of nominees, trusts and foundations, and shareholding arrangements structured to bypass or avoid thresholds for regulatory checks.’
Reliance on third-party providers or white-label arrangements ‘without robust oversight,’ as well as contracts with software, marketing, consultancy or technology providers that ‘appear to lack economic or commercial sense.’
Rapid expansion by operators into digital-led services such as virtual-asset or payment services, unexplained spikes in revenue or customer activity, and
Significant cross-border business-to-business financial flows ‘unrelated to regulated gambling activity.’
The FATF also said that at customer level, multiple accounts, repeated use of virtual private networks, discrepancies between customer and payment information, unexplained sources of wealth and transactions involving higher-risk jurisdictions among potential warning signs, should be considered red flags.
On the other hand, payment-related red flags include the use of multiple payment methods in different names, deposits followed by withdrawals with little or no play, third-party deposits, rapid withdrawals to different beneficiaries and transactions involving virtual assets.
FATF said in the report that gaming and gambling had become part of a broader, interconnected value-transfer ecosystem involving numerous participants, some of which sit outside national anti-money laundering (AML) and counter-terrorist financing (CFT) frameworks.
It added that the study was based on questionnaire responses from 80 jurisdictions ‘from across the FATF Global Network,’ and ‘targeted consultation with industry bodies, researchers and private sector stakeholders’, as well as case studies provided by national authorities.
FATF concluded that money laundering through gambling ‘is an established risk across many jurisdictions,’ with land-based and online casinos, as well as sports betting, considered particularly exposed.
By comparison, money laundering through online video and mobile gaming appeared to take place on a smaller scale, or with less sophistication and frequency, based on currently available evidence, according to the report.
FATF highlighted the growing variety of payment channels available to customers.
‘Findings indicate that certain payment methods associated with gaming and gambling activity, such as cash, e-wallets, mobile money and virtual assets are vulnerable to a range of money-laundering risks,’ the watchdog said in the report that was published this month.
‘The variety of payment methods accepted by online gaming and gambling operators increasingly allows rapid, anonymous, cross-border transactions, and the conversion of value into different forms,’ FATF said.
Online gaming and gambling platforms are also increasingly interconnected with social media and other digital platforms, which ‘can increase’ risks, the report noted. Such channels ‘can be used to communicate and coordinate illicit activity such as competition manipulation, advertise illegal or unlicensed gambling [and] recruitment of money mules,’ among other activities, it added.