The popularity of online gaming and gambling services has seen a rise in flushed illicit money, as a result all companies in the sector need to tighten their compliance processes.

With increasingly large amounts of money flowing through online casinos, digital sportsbooks, and similar services, it is time for companies to recognise the threat of money laundering and take immediate action. 

The gaming and gambling sector is unique, alongside financial services, in that it is regulated for the purposes of complying with money laundering legislation. 

As a direct result, anti-money laundering (AML) and counter financing for terrorism (CFT) protocols must be implemented by companies that offer any form of gambling service. Any unaccounted for AML processes can be exploited by criminals, making an operator liable to investigation by regulators. 

With the global online gambling industry forecast to be worth $93bn by 2023, it is set to provide even greater opportunities for criminals to hide their illicit proceeds. 

Both criminal activity and lack of compliance are damaging to gaming and gambling companies and can result in penalties, punitive fines, and damage to organisational reputation. 

How criminals seek to exploit the sector 

The FATF identifies at least nine ways in which gaming and gambling companies may be particularly vulnerable to money laundering.  

These include, receiving the proceeds of crime, accepting cash payments, transfers between customers, the improper use of third parties, casino deposit accounts, pre-paid cards, identity fraud, multiple accounts, and multiple operators. 

For example, with regard to receiving the proceeds of crime. Any business accepting payments from retail customers faces the risk that the cash has come from illegal activities, but the volume of customers with which gaming and gambling companies deal greatly increases this vulnerability. 

For a fuller explanation of the dangers posed by the nine ways gaming and gambling companies may be vulnerable to money laundering, download our spotlight report here 

Failure to spot risk and take action can result in huge fines from regulatory bodies. The cost of non-compliance then rises even further as the offending company has to work to correct deficiencies in its processes.

Furthermore, there is the added danger to a company’s reputation, growth can be hampered, and there is the possibility of legal action and even prison sentences. 

Regulatory bodies are increasingly cracking down on the gaming and gambling sector 

Regulatory bodies are increasingly investigating and prosecuting companies judged to have fallen short on AML and CFT standards. 

Indeed, there have been many failures within the sector to comply with AML procedures, leading to region-specific regulators taking harsh action. 

“In March 2022, the UK Gambling Commission fined 888 UK Limited £9.4m for a series of money laundering and social responsibility failings. The penalty followed a £2m fine levied just two months earlier against BetVictor relating to similar issues. Action against Genesis Global went even further, resulting in a £3.8m fine and a three-month suspension of its licence to operate.” 

Gaming and gambling providers have a duty to alert suspicious activity 

The Money Laundering Regulations 2017 introduced a specific rule for companies to conduct annual written assessments regarding their own vulnerabilities to money laundering, or more frequently if they are particularly at risk.  

Other regulations warn operators to carry out ongoing screening of their employees, conduct enhanced due diligence on customers who place bets totalling €2000 or more in 24 hours, appoint a nominated compliance officer, and set up an independent audit process to measure their compliance effectiveness. 

The Gambling Commission is the UK’s supervisory authority which details continually updated guidance on the emerging risks faced by remote and non-remote gaming and gambling operators. But it also gives companies some freedom to devise their own controls to best address the specific AML challenges they face. This follows the global Financial Action Task Force’s (FATF) risk-based, flexible approach for giving recommendations.  

Any suspicious activity recorded must be made aware to the Gambling Commission.

“Operators and employees working in remote and non-remote casinos are required to submit a SAR in respect of information that comes to them in the course of their business if they know, or suspect or have reasonable grounds for knowing or suspecting, that a person is engaged in, or attempting, money laundering or terrorist financing.” 

By identifying areas of weakness, money laundering can be more easily spotted 

The gaming and gambling sector has been hit hard by illegal activity. Stringent regulations are in place to curb the threat of money laundering, but these can also have a detrimental effect if a business cannot display compliance. 

In order to help, we have put together an in-depth report entitled: AML Vulnerabilities in Gaming and Gambling.

AML Gaming Gambling

In this spotlight report, we cover:  

  • Where companies are at risk of money launder and terrorist financing 
  • The regulations the industry needs to know 
  • How to ensure AML and CFT compliance 
  • The role technology plays in reducing risk

For your free copy click here. 

After identifying AML pain points, the latest automated processes are essential to monitor ongoing activity

Knowing your customer is a basic requirement for gaming and gambling operators. It is the first key step in your holistic risk screening strategy, but it should involve the implementation of the latest automated AML & KYC screening solution 

Automating AML processes provides comfort that activities such as screening and monitoring are taking place quickly and accurately, reducing the risk of a compliance failure.

The gaming and gambling sector is under increasing pressure from regulatory scrutiny as the compliance landscape adapts to changing criminal activity.  

RiskScreen’s automated AML & KYC screening solutions are being adopted by an increasing number of gaming and gambling operators to help them to meet the challenges posed by money launderers.

For a no-obligation demonstration of how our solutions could benefit your organisation, contact us today.


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