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After problem gambling, criminal activity is the biggest concern for gambling regulators, as
shady organizations are always looking at where to legitimize their ill-gained profits.
Unfortunately, they have found in the gambling industry, the perfect catalyst for their
financial needs.

Aware of this interest, global organisms such as the International Monetary Fund and the
Financial Action Task Force (FATF) has created a series of control measures to tackle
money laundering, and prevent financing of terrorism and any other criminal organization.

Regulators complying with these controls in their jurisdictions must provide the necessary
guidelines to their licensed operators; translating them into protection mechanisms to
prevent that the next VIP they reward is another layman.or criminal kingpin.

Although compliance of the AML/CFT controls is mandatory for operators, customers are
equally responsible for their behavior, and legal action will proceed if they are found
engaged in suspicious behavior. Not knowing the law is not an excuse for its compliance.

Money Laundering and Terrorist Financing.

Drug trafficking, smuggling, and even tax evasion are highly profitable crimes that face a
hard time trying to conceal their massive profits. Terrorists also depend on the coverage of
their income sources as they require supplies from food to the weapons needed to support
their activities. This also includes the payments and even compensation of their militants and
families of terrorist and criminal organizations.

For these unlawful elements, money laundering is the only way to achieve the legitimization
of their income.

Despite the complex schemes created, money laundering works by using 3 simple, yet
critical steps.


Money enters into the financial system, retail market, or even smuggled to another
country. The aim is to evade authorities and transform the criminal proceeds into other


In order to keep anonymity, any possible audit that can disclose the real source of income
must be diverted. to blur their tracks, money launderers create deep, complex layers of
financial transactions.


Once the proceeds are assimilated into the legitimate economy and returned with the
appearance of being legally earned, the laundering process can be considered complete.

Along with covering assets from illegal operations, money laundering creates a huge
distortion in target economies as 2 – 5% of global GDP, or $800 billion – $2 trillion in current
US dollars is reported to be laundered.

The Gaming Stigma

The gambling industry has always been tied to a love-hate relation with crime. Greatly
practiced during the prohibition, it has now become the top choice for laundering operations.

There are two main forms of money laundering involving gambling

Standard money laundering: The exchange of criminally obtained money, assets,
goods, and property through gambling activities to make them appear legitimately

Lifestyle spent: Using criminal proceeds to fund gambling as a leisure activity.
With the appearance of online gambling, the opportunity to speed up things wasn’t second-

Instead of getting exposed by delivering a cash juggernaut to land casinos, online laundering
operation allows the creation of numerous accounts funded with prepaid or stolen cards. After having a couple of innocent flutters the money is withdrawn, ironed, and folded to its
real purpose. Operators are aware of the practice but the huge spread makes it almost
unnoticeable to track down the real source of these practices.

This doesn’t mean that operators can wash their hands of guilt. In 2018, The UK Gambling
Commission landed a 6,2M fine to William Hill for critical vulnerabilities regarding the
protection of their customers and the industry from criminal practices. In weaker jurisdictions
the lack of enforcement allows these operations to flourish for longer periods.

KYC for Operators

Gaming operators are responsible for fully identifying their customers and source of funding.
The procedure is mandatory and it should be enforced before customers make their first bet.
However, it has become a common practice to carry these document verifications only when
customers start online gambling with no verification and then want to withdraw their funds.
And in some cases, when these withdrawals exceed a certain amount.

That kind of approach has only provided an exploitable gap where microtransactions
become prevalent as is one of the many procedures criminals have to sort all the preventive

If a customer becomes suspect of criminal activities, operators are obligated to freeze the
account until its complete disclosure. The process can become challenging considering how
criminals can easily obtain fake, stolen, and even legit government-issued ID for their

Despite criminals having a step further than regulators, having the proper prevention
the measure can greatly limit the harm they can cause.

Risk Assessment AML/CFT

Instead of hunting down each and every existing money launderer, THe ATF established 3
criteria to assess the risk factors that criminals take advantage:


Potential risks that can encourage illegal financing operations are listed through the
detection of systematic flaws based on customers, services, and location context.


By performing a holistic understanding of each of the risks previously identified, the
likelihood of occurrence and the current control employed to allow the creation of scenarios
where outcomes of measures are studied, leading us to,


At this point, risk management and mitigation strategies are applied while monitoring their
impact on prevention and control against money laundering and terrorist financing. The
outcome of the strategies is reidentified in order to detect any residual breach.

Final Words

The war against criminal organizations trying to introduce their gains into the legit economy
for their upkeep is a never-ending one. The pursuit of profit for the profit itself has led to this
unbalance and tarnished reputation paired with those of criminal nature.

The day where gambling companies fully comply with the recommended measures to
protect customers and themselves and even promote ethics as a source of value, not even
the largest criminal syndicate will be able to breach its trust and transparency.

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