KYC Money Laundering – The Negative Impact on the Gambling World

By | June 7, 2022

For decades, money launderers have used different methods to turn their dirty money into clean cash. They have also transferred their money from different institutions to hide the exact origin of their illicit money. Similarly, multiple online gambling platforms provide money launderers with an opportunity to launder their money (an option reserved for wealthy people). There are other options on online platforms for money launderers but digital gambling platforms are an easier option. It is because they can bypass the AML regulation checks easily. KYC anti money laundering has been a good solution to tackle this 

How are Casinos at an Elevated Risk Regarding Money Laundering?

Casinos do not strictly adhere to anti-money laundering guidelines for keeping a check on their daily transactions. It gives an easier path for money launderers for spending their money. Leniency in the monitoring procedures means that the client does not need to show the source of their money. In most cases, cybercriminals use different tricks to legitimize their money. It can be through illegal service providers or different organizational structures. 

A Case of Money Laundering

On the 7th of June, authorities performed a formal investigation on different big cities in Australia. The national bank performed the investigation and the professionals found that they were helping the money launderers in their illegal activities. Moreover, their staff members were at a greater risk of detention by foreign institutions. 

What are the Big Risks Involved in the Gambling Sector?

It is also the case that gambling institutions do not address AML guidelines explicitly. However, there are local authorities in the United Kingdom that want to strictly implement AML solutions. It is because casinos suffered from a heavy financial loss in 2019. The FinCEN also introduced KYC AML guidelines for the gambling sector. 

Some consistent red flags indicate money laundering. For instance, a marked inconsistency between expenses and the source of income. A trick that money launderers use to hide their illegal money or keep it undetected, is they use illegal services to protect their money. However, the risk of money laundering is deeper in the gambling sector due to the involvement of B2B relationships. Sometimes there are third parties involved that can pose a potential risk to the gambling industry. Consequently, gambling platforms can lose their partners and incur heavy fines due to rising incidences of money laundering. 

How can Online Gambling Platforms Safeguard Themselves?

In September 2020, the United Kingdom took the initiative to spread awareness regarding the risks of digital gambling. They also made it mandatory for teaching at schools. Online casinos can do the same and spread awareness about financial crimes. In addition to it, they should not operate under the victim role and stick to AML/KYC compliance. It can be done easily if casinos become transparent about their regular activities. 

The Role of AI-based Screening Procedures

Due to years of experience, money launderers can use different tricks to fool the regulatory systems. It is easily possible through P2P financial transactions. Cybercriminals use different platforms to hide the origin of their money and keep it undetected by the authorities. Then they use different strategies to turn their black money into white money. In this way, they can obtain real cash and store it in legitimate accounts. On the record, it looks like they are complying with KYC AML regulations. The gambling industry is no longer a place where simple name information and other personal data submission are enough. There is a high need for AI-backed screening solutions to detect suspicious activities and due diligence financial services. 

The Statement from FinCEN

Financial Crimes Enforcement Network encourages the use of AI as an advanced solution for preventing financial crimes. It will make AML compliance much easier for the casinos. Any financial activity through the casinos is just like other products and services in the place. The expectation from FinCEN is that there should regular monitoring of all the transactions even if it is happening on mobile apps. These strict measures will surely help in fraud detection. 

For smooth functioning, the online gambling service providers must report to NCA through official means. It is important because they keep getting penalized for helping financial terrorists. For this purpose, the staff members of Casino businesses should be aware of KYC AML regulations. It will make it easier for them to keep a track of suspicious and high-risk players. 

Final Thoughts

To sum up, digital gambling platforms come under the supervision of AML and CFT. However, the same technique cannot be applied to risk analyses and exchange monitoring procedures. The latest technologies have the integration of artificial intelligence which makes it easier to remain compliant with rules and regulations. The gambling platforms can also perform identity verification on their customers through the given solution. 

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