The Financial Action Task Force has published a report on money laundering risks in gambling. According to 'Red Flag Risk Indicators: Risks of Gaming and Gambling', illegal and unlicensed operators in some jurisdictions have grown to rival legal markets in size, creating serious threats of money laundering and terrorist financing.
The study covered 80 jurisdictions, including online and land-based formats. FATF identified several indicators of suspicious activity: deposits followed by withdrawal with minimal play, use of multiple accounts or payment methods, and transactions involving unrelated third parties. The online segment was singled out as particularly vulnerable due to transaction speed and volume, cross-border operations and the variety of payment instruments.
VPN services that hide player location pose additional risks, as does the integration of illegal operators with social networks for promotion and coordination. Cryptocurrency aggravates the problem: operators accept it for deposits and payouts, making fund flows harder to trace. Another technique is the use of fake merchants that disguise gambling transactions as payments for goods or services.
In land-based formats, risks include large cash transactions, payments through third parties, and conversion of illegal funds into 'legitimate' winnings. Criminals buy chips or vouchers with criminal proceeds, then cash them out while simulating gambling activity. Structuring and the use of multiple individuals help circumvent controls.
Regulatory differences between countries complicate enforcement: operators exploit gaps in national frameworks, and cross-border prosecution remains difficult. FATF recommends a risk-based approach, stricter licensing, raising awareness among providers and the public, stronger international cooperation, and public-private partnerships for data sharing.
