The global illicit finance watchdog, the Financial Action Task Force has alerted Bermuda and other countries to new ways to spot opportunities for criminal abuse in the gaming and gambling sectors.

The Paris-based organisation is warning that criminals are using gambling platforms to move money without actually gambling, making multiple small transactions (“smurfing”) to avoid detection and unusually large or co-ordinated bets on events flagged for possible competition manipulation.

The new analysis follows what the FATF called an increase in market size globally, a rise in the use of online platforms, and as payment methods allow rapid, anonymous transactions across borders.

Based on findings from a recently completed project, the FATF has published new risk indicators to help governments, regulators and private sector entities identify and respond to money laundering, terrorist financing and proliferation financing risks in the rapidly evolving gaming and gambling sectors.

Drawing on contributions from more than 80 jurisdictions and a range of industry bodies and researchers, the project examined financial crime risks across casinos, gambling activities and video gaming over the course of a year. The project also marks the FATF’s first detailed examination of risks associated with online and illegal gambling.

The statement said: “The project identified illegal gambling as one of the sector's most significant risks. In many jurisdictions, illegal markets rival or even exceed the size of legal gambling markets.

“Illegal gambling operators are prevalent across jurisdictions, regardless of the legal status of gambling or the regulatory frameworks in place.

“Illegal and unlicensed offshore operators often present themselves as legitimate businesses while offering anonymity and incentives that can attract both consumers and criminal actors.

“Technological innovation has expanded activity across online, cross-border and multi-payment platforms, creating increasingly complex ecosystems for regulators and law enforcement.

“With gaming and gambling activities increasingly interconnected with the wider digital economy, they provide multiple points of access to the formal financial system. Payment systems used in gaming and gambling, such as cash, e-wallets, mobile money and virtual assets, are vulnerable to a range of money laundering risks.”

The FATF also warns that beneficial ownership shareholding of platforms can be structured to bypass thresholds for regulatory checks, especially when AML/CFT controls and anti-corruption frameworks are weak.

Giles Thomson, FATF president commented: “Without robust safeguards, these sectors can be attractive gateways for fraudsters, professional money launderers and organised criminal networks.

“I urge all governments to take note of the risk indicators we have set out today, and put in place appropriate risk-based responses — from strengthening oversight and cracking down on illegal and offshore operators, to boosting international co-operation, and deepening public-private collaboration.”

The project identified links between gaming and gambling abuse and a range of other offences, including corruption, cyber-enabled fraud, professional money laundering networks and the use of illegal or unlicensed offshore operators to facilitate criminal activity.

• For more on the report Risks of Gaming and Gambling, see Related Media

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