Online Gambling Sites Used to Launder Proceeds of Crime
A warning has been issued by Canada’s financial intelligence agency that criminals are using online gambling sites to launder money.
In a recent bulletin, the Financial Transactions and Reports Analysis Centre of Canada (Fintrac) explained that gambling sites often unwittingly provide a number of ways to hide illicit cash and that both licensed and unlicensed sites are being exploited by criminals.
Of course, this isn’t a concern to our recommended top online baccarat sites, which are regulated and operated by the most reliable and respected institutions in the gambling world.
Analysis of Millions of Transactions
Fintrac highlighted the increase in popularity of online gambling during the recent Covid-19 pandemic and the activity has further grown since single-event sports betting was legalized in Canada in 2021.
The agency looks for money that is connected to crime by electronically sorting millions of data points from banks, online casinos, money-service businesses, insurance companies, real estate brokers, securities dealers, and so on. It then passes on details of any suspicious activities it uncovers to police or other relevant agencies.
For its latest bulletin, Fintrac looked at suspicious transaction reports linked to online gambling from between 2016 and 2023. Additionally, it analyzed data from other financial intelligence agencies, domestic and international organizations, and a number of open sources in order to try to find patterns.
Multiple Payment Methods Facilitate Money Laundering
In the bulletin, Fintrac wrote:
“Online gambling sites offer prospective money launderers opportunities to conceal the source of their funds by using multiple different deposit and withdrawal methods.”
The agency found that a common method used by criminals is to purchase prepaid cards or vouchers using illicit money. They would then deposit the funds into gambling accounts before withdrawing the money using bank wire or e-transfer to a Canadian bank account labelling the money as winnings.
The bulletin explains how bank accounts were also used as a way of rapidly moving the proceeds of crime to licensed or black-market online gambling accounts. For example, a bank account that may receive funds from a crime such as drug dealing would be quickly emptied by making a number of deposits at online gambling sites.
Going into further details, the bulletin said:
“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.”
Crime Proceeds Used to Operate Unlicensed Site
Fintrac even found an instance of an organized criminal group laundering its proceeds by running an unlicensed gambling site through the accounts of unrelated businesses. However, it did not provide details of the case.
While an unlicensed gambling site is not permitted to hold an account at a Canadian financial institution, the agency found that the operators of these sites have been sending funds to accounts in Canada.
According to the bulletin, these gaming operators are often based in jurisdictions “that have weak anti-money laundering regimes, engage in highly secretive banking, and provide tax haven capabilities.”
Financial Transactions and Reports Analysis Centre of Canada (Fintrac) used its analysis to create a long list of possible signs that money laundering at online gambling sites is occurring. Some of these are fairly straightforward, such as a player providing identification that is suspected to be stolen or that makes use of generic addresses (e.g., post office boxes). Other items on the list are:
- Client engages in limited or no gaming activity, despite significant deposits to accounts, followed by a request to withdraw in excess of any winnings.
- Client requests the transfer of winnings to the bank account of another party or to a high-risk jurisdiction.
- Geolocation of client log-ins are not consistent with registered client addresses or log-in history.
- Common credit cards are used by multiple online players for deposits.
- Client makes excessive deposits using prepaid cards, which may involve an excessive number of cards.
- Client deposits funds well in excess of what is required to sustain usual gambling patterns.
There are many more items on the list, as well as an entirely separate list of indicators that financial entities and money service businesses should monitor for.
Why Online Baccarat is a Common Choice for Money Launderers
In another section of the bulletin, Fintrac explains how minimal gambling activity before withdrawing funds is a common money laundering method. The bulletin uses the example of placing low-risk sports bets. However, online baccarat is another viable option. The banker bet has a house edge of just 1.06%, and while there is no guarantee of winning, over time it should provide reasonable returns. Luckily, this is true whether playing with the proceeds of crime or hard-earned money, which is one of the reasons why baccarat remains so popular with players of all kinds.
