Money Launderers Are Utilizing Online Gambling Sites To Launder Illegal Money, FINTRAC Warns

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Canada’s financial intelligence agency, has issued a warning that illegal money is being laundered via iGaming sites that offer many different ways to hide suspicious funds.

Criminal exploit lodi291 ation of unlicensed and legitimate digital wagering operations:

In a recent newsletter, FINTRAC emphasized the “criminal exploitation“ of unlicensed and legitimate digital betting operations. In addition, it points out that the fame of online gambling has increased throughout the pandemic and has been boosted by the official approval of single-event sports wagering in Canada during 2021.

To identify cash linked to illegal activities, the aforementioned FINTRAC electronically transmits millions bits of info every year from securities dealers, casinos, money-service businesses, real estate brokers, insurance firms and others. Additionally, it reveals intelligence received about suspicious cases to police as well as other law enforcement agencies.

Relatedly, the aforementioned financial intelligence agency, when it began to produce the aforementioned newsletter, examined reports of suspicious transactions linked to online gambling in the period from 2016 to the previous year. But that’s not all; because it also took into account estimates from international and domestic organizations, information collected from other financial intelligence agencies, as well as data from open sources to uncover patterns and trends, according to The Canadian Press.

In this regard, the newsletter said: “Online gambling sites offer prospective money launderers opportunities to conceal the source of their funds by using multiple different deposit and withdrawal methods.”

FINTRAC’s findings:

FINTRAC discovered that a standard tactic was to buy vouchers or prepaid cards utilizing funds suspected to be the proceeds of crime. These funds are then utilized to deposit cash into bank accounts used for gambling, after which they are withdrawn via e-transfer or wire to the bank account in Canada under the disguise of cash winnings.

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On a related note, the bank accounts were also a vehicle for the distribution and placement of proceeds of crime via unlicensed and licensed gambling websites, according to the newsletter. For example, bank deposits that can be connected to crimes like human trafficking and drug dealing are occasionally exhausted by frequent and rapid online gambling transfers or purchases to payment service suppliers widely known to facilitate transactions on gambling sites.

In this regard, the newsletter stated: “Other accounts appeared to exist mainly to facilitate money laundering through online gambling activity. This included transactional activity that appeared circular in nature where funds were received and sent back to the same gambling sites multiple times.”

Moreover, in 1 case, one organized crime group laundered money from criminal activities by managing a non-legal gambling site, meaning that it didn’t have a license, via the accounts of separate businesses, according to FINTRAC.

Even though gambling sites that don’t have a license cannot have accounts with Canadian financial institutions, persons and firms that manage these sites have been noticed sending money to accounts in Canada, the newsletter added. In this sense, it said: “Frequently, these gaming companies are located in jurisdictions that have weak anti-money laundering regimes, engage in highly secretive banking, and provide tax haven capabilities.”

List of possible indicators of money laundering through online gambling sites:

Analysis by FINTRAC has provided help to agency to develop a comprehensive catalog of potential signs of money laundering via online gambling websites.

For instance, it called on institutions to be wary of utilizing accounts solely for internet gambling, without proof of day-to-day banking activities. Additionally, it also informed them to watch out for immoderate transactions with 1 or an additional number of gambling websites that:

don’t request customer-knowing information from clientswhich have no restrictions on the values and volumes of wagersaren’t federally or provincially authorizeddon’t disclose details of their registration or jurisdiction or ownership

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