Money laundering risks in the gaming industry are becoming ever more prevalent in casinos, betting shops, and online
The gaming industry has never been more popular. Revenue in the online gambling market is expected to reach $132.9 billion in 2029, up from $97.2 billion in 2024. The sector’s rise in popularity has also seen increased regulations and laws, and enhanced customer due diligence (CDD) requirements in response to escalating money laundering risk.
In 2023, the Asian gambling industry was fined a total of $475m for anti-money laundering (AML), the third highest after banking and cryptocurrency. One company in Australia received a $450 million fine for breaking AML/CTF laws. AUSTRAC has also issued a $67m fine to a different company in 2024, while the UK’s Gambling Commission fined 13 companies in 2023, many of them for breaking money laundering laws.
Money laundering risks in casinos
Criminals have been associated with casinos for decades, dating back to when Las Vegas was under the control of the mob. In illegal casinos, there was an ‘anything goes’ element to proceedings, but using an illegal casino came with its own problems. As such, legal casinos were often used for criminal activities. Criminals would convert ‘dirty’ cash into casino chips, play a few games, and then cash the chips back into money. For a small loss (or perhaps even a profit!), criminals were able to quickly launder their illicit gains.
As technology became ever more prevalent, laundering money became even easier with the advent of fixed-odds betting terminals. This method requires no human interaction until it comes to cashing out. Know-your-customer (KYC) and CDD processes weren’t what they are now, so gamblers could often give vague or inaccurate information, or open multiple accounts at the same casino.
Today, with insufficient anti-money laundering controls in place, casinos can still fall foul of money laundering – European countries issued a combined €314m in fines in 2023.
Money laundering risks in online gaming
Money laundering risks in gaming are even more prevalent online. Thanks to the anonymity of the internet, vast sums of money can be gambled and laundered with no human interaction ever taking place. With multiple deposits and multiple accounts, a criminal could theoretically launder money far faster than ever before, which is why financial crime prevention software – and anti-money laundering tools in particular – are so important.
To mitigate the risks of money laundering in online gaming and adhere to regulation, operators must be able to spot suspicious behaviors and activities as they occur. Anti-money laundering processes that online gambling companies need to initiate and maintain include:
- Robust KYC/CDD procedures – an online gaming company should be using KYC/CDD software to its full potential. Due to a lack of face-to-face interactions online, criminal customers try to gamble with fake identities and stolen credits to launder money.
- Forbidding multiple accounts – although most bookmakers and online gaming companies forbid the opening of multiple accounts, criminals may try and open multiple in different names, further obscuring the origination of funds. Identical IP addresses can normally provide a positive alert as can betting patterns.
- Comprehensive transaction monitoring – gambling companies can monitor transaction and patterns using AML transaction monitoring software. By highlighting account details alongside how much money is transferred in and out of the account, an organization can quickly highlight suspicious behavior. This can be particularly helpful if someone is looking to launder large amounts of money.
- Similar controls across different jurisdictions – gaming regulations and laws differ around the world. If a company operates in more than one country, they face different laws in each one, with some being stricter or prohibiting gambling (e.g., China) than others (e.g., Malta). For the most effective anti-money laundering practices, consider using similar controls in each country. That way, criminals in a more relaxed country like Malta will have to look elsewhere when wishing to launder money via online gambling.
There is no ‘one size fits all’ approach; to prevent money laundering in gaming most effectively, each company must customize its approach to align with its risk tolerance.
How does money laundering in gambling occur?
Gaming companies, and particularly online gaming companies, can unwittingly facilitate every stage of money laundering:
- Placement: Illegally obtained funds are deposited into a gaming account for gambling. Introducing the money into the financial system is the first way of legitimizing it.
- Layering: The money is disguised in multiple ways by the account holder. They may place large and small bets, which win and lose, transfer to other accounts, and ultimately withdraw whatever is left. Losing some of the money is seen as a legitimate trade-off for legalizing the rest.
- Integration: The money is withdrawn and used for legitimate purposes that can be traced. This might include purchasing luxury items, property, or investing in stocks and shares.
In addition to the three stages of money laundering, there are many methods that bad actors might use to obscure their intentions:
- Coordinated betting – where players work with others to achieve their aims. When one player wins, another may lose. In this way, the losses are kept to a minimum and the remaining funds’ origin further obscured. ‘Chip dumping’ is a form of coordinated betting where a player deliberately transfers a large sum of money to someone else by playing poorly. This is most common during games of poker.
- Smurfing – large sums of money are broken down into smaller transactions – small bets – to evade financial crime detection software. Some casinos may not scrutinize withdrawals or wins below a certain threshold.
- Multi-accounting – money laundering in online gaming is a lot easier when you control every single account at the table. Multi-accounting (also known as ‘gnoming’) is used by criminals as it speeds up legitimizing their illicit funds; every ‘player’ at the table, win or lose, is laundering the money in their accounts.
- Transfers – whereby a player transfers money to another player, which is often immediately withdrawn to an offline account.
- Concealment – keeping the illicit funds in an account for an extended period until the heat is off. A player may not even gamble with the proceeds before withdrawing it to the same account the funds originally came from.
How to spot money laundering in online gaming
Spotting money laundering in online gaming isn’t easy, even with many anti-money laundering processes in place. In addition to the methods mentioned above (multiple accounts, etc.), gaming companies can avoid facilitating criminals with their illegal activities by looking for specific indicators:
- Accounts that are opened and closed a lot more quickly than normal, often after only a few transactions have been placed.
- New accounts that see many separate large transactions within a short amount of time.
- Large bets being placed in low-risk games. This could also be classed as irrational betting. If it doesn’t make logical sense, it could be a sign that there is something more going on.
- Cryptocurrency deposits. Because cryptocurrencies are notoriously high-risk, they are often associated with money laundering.
Financial crime prevention software can help with these matters. It can spot questionable behavior, go beyond rules-based mitigation, and use predictive AI to help casinos and betting firms detect and prevent money laundering. For example, SymphonyAI offers the award-winning SensaAI for AML, an AI overlay that plugs directly into an existing case management system to strengthen criminal defences while significantly reducing false positives.
How to mitigate AML risks in gaming
Gaming companies, especially those involved in online gambling, can face significant money laundering exposure. There are a few previously mentioned ways that these threats and risks can be mitigated including implementing KYC/CDD procedures and proactively monitoring player behavior and transactions.
Other mitigation measures include:
- Establishing clear AML policies and procedures – by developing comprehensive anti-money laundering guidelines, gaming companies can stay ahead of bad actors. The policy should include regular updates to comply with changing regulations and offering regular training for staff so that they understand potential AML risks in gaming.
- Use AI machine learning and advanced analytics – By using AI machine learning algorithms, gambling companies can detect complex patterns and anomalies, use data analytics to identify potential money laundering, and continuously improve their financial crime detection tools by updating their models with new data and emerging trends.
- Collaboration with regulators and industry peers – by maintaining open communication with law enforcement, peers, and regulatory bodies via industry forums and working groups, best practices can be shared.
By enacting these measures, gaming companies can significantly reduce their exposure to money laundering risks and maintain compliance with AML regulations.
AML regulations and gaming
Gaming in person and online gaming have different anti-money laundering regulations depending on the country or jurisdiction. It can even be confusing on a countrywide basis because some countries like China ban gambling, but Macao, a gambling hub within the country, conversely has relatively loose AML regulations.
In the US, online gaming is regulated at a federal and state level with the Federal Wire Act governing interstate betting and sports betting. However, FinCEN expects online gaming platforms to comply with the Bank Secrecy Act and AML programs in the same way that traditional casinos are expected to. In this way, gaming companies (alongside bank and other financial institutions) help prevent fraud, corruption, cybercrime, terrorist financing, human trafficking, and drug trafficking.
Interestingly, Europe regulates gambling at a national level with no unified EU policy on gaming. The UK’s Gambling Commission oversees the sector within the country, able to enforce fines if gaming companies fail to comply with numerous acts including The Terrorism Act 2000, The Proceeds of Crime Act 2002, and The Gambling Act 2005.
Gambling laws in Australia are complex as there is no unified overarching statute regulating gambling activities. Alongside this, unlike in the UK, there is no single overarching gaming authority. As such, gambling in Australia is regulated at the state, territory, and federal level with each of Australia’s eight mainland states and territories regulating gambling activities within their respective jurisdictions. In addition, a series of federal statutes cover certain aspects of gambling activity throughout Australia.
Each of these countries regularly issues fines for failure to comply with AML laws.
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