If you’ve read much about the rules and regulations around gambling and money laundering, you will no doubt be aware that it is a serious problem for the industry. The United Kingdom Gambling Commission regularly issues fines to organisations that fail in their anti-money laundering duties, such is the extent to which they are trying to clamp down on it as much as possible.
Many of us know, therefore, that money laundering is an issue, but few of us are aware of how such a thing takes place or the methods that are used by nefarious characters in order to engage in it.
Money laundering is the process of disguising illicit funds as legitimate earnings and has been a persistent challenge for law enforcement agencies in all walks of life, but especially when it comes to the gambling industry. Amongst various channels used for laundering, gambling establishments, including both physical casinos and digital platforms, offer criminals an attractive method to conceal the origins of ill-gotten gains.
The question is, how does it happen and is there anything you can keep an eye out for in order to report to the authorities if you think it might be happening?
Money Laundering Through Traditional Casinos
Traditional brick-and-mortar casinos have long been associated with money laundering due to their large cash transactions and complex financial structures. Cash insertion, also known as ‘structuring’ or ‘smurfing’, is one such method used by criminals to launder money through gambling establishments and physical casinos in particular.
The technique involves directly inserting large amounts of illicit cash into the casino’s gaming machines, such as slot machines, and then converting the funds into casino chips or gaming credits. The launderer would then play for a brief period before cashing out the remaining chips.
This effectively transforms the tainted money into apparently legitimate gambling winnings. The cash insertion method takes advantage of the high volume of cash transactions that occur within casinos and the relative ease of converting cash into gaming credits.
Criminals are drawn to this method due to the seemingly straightforward process and the ability to obscure the illicit origins of the money. It helps that casinos usually do not require extensive personal information when exchanging cash for gaming chips, providing a level of anonymity that helps launderers avoid detection.
By inserting significant amounts of cash into the gaming machines, criminals can effectively ‘clean’ large sums of illicit money in a single transaction, which helps to minimise their exposure. Criminals also typically engage in minimal gambling activity to avoid attracting attention.
They aim to create the illusion of gambling for leisure while merely converting the illicit cash into a different form. After a brief period of play, the launderer cashes out the remaining chips, receiving clean money in return, which appears to be gambling winnings, often taking just a small hit to their profits.
Casinos are subject to anti-money laundering regulations, requiring them to report cash transactions that exceed certain thresholds to authorities. By keeping individual transactions under these reporting limits, launderers can avoid detection.
The use of cash insertion for money laundering is not limited to casinos. It can also occur in other gambling venues, such as betting shops, race tracks and card rooms. Not only that, but the rise of online casinos and gambling platforms has led to variations of this method, where criminals may use prepaid cards, digital currencies or virtual gaming credits to launder money.
To combat money laundering through cash insertion and similar methods, casinos and other gambling establishments implement strict AML procedures. They conduct due diligence on customers, monitor transactions for suspicious activity, and report any potential illicit activity to relevant authorities. However, the ever-evolving tactics of money launderers and the anonymity provided by online platforms make detecting and preventing such activities an ongoing challenge for law enforcement and regulatory bodies.
Consequently, collaborative efforts between the gambling industry, financial institutions, and governmental agencies are crucial in the fight against money laundering through gambling.
Online Platforms Can Be Used As Vehicles To Launder Money
With the rise of online gambling, criminals have adapted their techniques to exploit digital platforms for money laundering. The anonymity, convenience and global reach of online casinos present new challenges for authorities, with criminals often converting illicit funds into cryptocurrencies, making it challenging to trace the origins of the money, and then using these cryptocurrencies on online gambling platforms.
The fact that it has become more and more common for online betting sites to accept cryptocurrency as payment is obviously a boon to those that would look to use them for illicit means.
Criminals also tend to utilise eWallets and online payment processors to launder money through multiple transactions, concealing the original source. There are numerous different eWallets on the market that specifically use the anonymity that they provide as a selling point for their use, so it is no surprise that they are often the platforms that people will turn to in order to launder money.
Whilst there are ways for the authorities to get information about them, it is often the case that their anonymity combined with the likes of cryptocurrencies mean that there is only so much that the authorities can do.
The spread of online sites has allowed criminals to engage in chip dumping, which is a technique in online poker or other multiplayer games to transfer money or chips between accounts. In the context of money laundering, chip dumping involves the deliberate transfer of chips or funds from one player to another. This can occur in online poker rooms or virtual casinos where players have the ability to transfer chips to other players.
The process typically involves two or more individuals working together to execute the transfer. The individuals involved in chip dumping collude with each other, often by communicating outside the game through messaging apps or other means.
They coordinate their actions to ensure a successful transfer of chips. One player intentionally loses chips to the designated recipient. This can be achieved by making weak or nonsensical plays, folding strong hands or purposefully losing chips in situations where they would otherwise be expected to win.
The chips are transferred from the losing player to the designated recipient, usually in a pre-determined or disguised manner. This can involve the losing player going all-in and the recipient calling the bet to acquire the chips. The individuals involved attempt to conceal the chip dumping transaction by making it appear like a legitimate game action.
They may use strategies such as randomising their play or manipulating their bets to make it less obvious. Chip dumping can serve as a method for money launderers to disguise the origin of funds. By transferring chips from accounts associated with illicit activities to seemingly unrelated accounts, they create a false appearance of legitimate gambling activity or winnings.
This can make it difficult for authorities to trace the illicit funds back to their original source. To combat chip dumping and money laundering in online gambling, platforms implement various security measures and monitoring systems.
These may include algorithms that detect suspicious patterns of play, automated alerts triggered by unusual transfer patterns and manual reviews of player activities.
Regulatory bodies and law enforcement agencies also work to identify and prosecute individuals involved in chip dumping and related money laundering activities. Cooperation between online gambling platforms, financial institutions, and authorities is crucial in preventing and addressing these illicit practices.
It’s worth noting that chip dumping is strictly prohibited by the terms and conditions of reputable gambling platforms. Engaging in chip dumping can result in severe penalties, including account suspension or permanent bans from the platform and potential legal consequences.