FATF Raises Global Alarm on Money Laundering, Fraud Risks in Gaming, Gambling
* Says payment systems such as e-wallets, mobile money, virtual assets, vulnerable to risks
Ndubuisi Francis in Abuja
Global anti-money laundering watchdog, Financial Action Task Force (FATF), has raised the alarm about criminal abuse associated with the gaming and gambling sectors, warning countries that criminals now use gambling platforms for money laundering and smurfing transactions.
In a new report, FATF said new risk indicators help identify suspicious activity and disrupt criminal abuse, 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 co-ordinated bets on events flagged for possible competition manipulation.
The Paris-based organisation explained that technological innovation creates complex ecosystems for regulators and law enforcement, adding that illegal gambling markets rival legal ones, offering anonymity to criminals.
The analysis by the FATF 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.
Based on findings from a recently completed project, the FATF published new risk indicators to help governments, regulators and private sector entities identify and respond to money laundering, terrorist financing and proliferation financing risks in the rapidly evolving gaming and gambling sectors.
Drawing on contributions from more than 80 jurisdictions (countries) and a range of industry bodies and researchers, the project examined financial crime risks across casinos, gambling activities and video gaming over the course of a year.
The project also marks FATF’s first detailed examination of risks associated with online and illegal gambling.
It identified illegal gambling as one of the sector’s most significant risks.
In many jurisdictions, illegal markets rival or even exceed the size of legal gambling markets. Illegal gambling operators are prevalent across jurisdictions, regardless of the legal status of gambling or the regulatory frameworks in place, FATF said.
According to the organisation, illegal and unlicensed offshore operators often present themselves as legitimate businesses while offering anonymity and incentives that can attract both consumers and criminal actors.
The FATF observed that technological innovation has expanded activity across online, cross-border and multi-payment platforms, creating increasingly complex ecosystems for regulators and law enforcement.
With gaming and gambling activities increasingly interconnected with the wider digital economy, it noted that they provide multiple points of access to the formal financial system.
The FATF said 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.
Gaming and gambling platforms, it stressed, depend on a wide range of related services, including social media platforms, digital marketplaces and software developers, adding that these actors may fall outside existing regulatory frameworks, creating additional opportunities for criminal abuse.
“Criminals and illegal operators can exploit differences in regulatory approaches across jurisdictions. These differences can also create barriers to information sharing between private and public sectors and challenges in international co-operation,” it said.
The FATF also warned that beneficial ownership shareholding of platforms can be structured to bypass thresholds for regulatory checks, especially when anti-money laundering and combating the financing of terrorism (AML/CFT) controls and anti-corruption frameworks are weak.
The project also highlighted the continued threat of criminal infiltration and exploitation of gaming and gambling operators.
It observed that traditional casinos have long been exposed to efforts by organised crime groups to gain ownership or influence over operations, stressing that these risks can be compounded in online environments with complex ownership structures.
The project identified links between gaming and gambling abuse and a range of other offences, including corruption, cyber-enabled fraud, professional money laundering networks and the use of illegal or unlicensed offshore operators to facilitate criminal activity.
The FATF’s new risk indicators and accompanying key findings aim to support public and private sector stakeholders by providing practical guidance to identify, assess and respond to suspicious activity.
The indicators highlighted behavioural, transactional and operational warning signs associated with money laundering and terrorist financing across gaming and gambling activities, helping authorities and industry better detect and disrupt criminal abuse.
These include the use of multiple accounts and payment methods under different identities, discrepancies between customer and payment information, suspicious identity documents and criminal links involving gambling operators or beneficial owners, including involvement in cyber-enabled fraud and organised crime, suspicious betting and transaction patterns and complex ownership structures that obscure beneficial ownership.