Financial Action Task Force (FATF) president Giles Thomson has called on global governments to crack down on illegal operators after the watchdog published a list of indicators to highlight the money laundering (ML), terrorist financing (TF) and proliferating financing (PF) risks in the gambling sector.
The FATF, an independent global watchdog that was originally established by the G7, examined gambling activity including online casino, sports and novelty betting, mobile gaming and non-casino gambling including scratch cards and lotteries.
The report also ran the rule over illegal operators, the business models and delivery channels used in gambling, and how gambling services interact with financial systems.
Commenting on the findings, Thomson said: “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.”
Eighty jurisdictions across the FATF Global Network responded to a questionnaire to support the findings in the 13-page document.
The guidelines were also supported by comments from 29 jurisdictions and targeted consultation with industry bodies, researchers and private sector stakeholders.
The report noted the increase in the size of the global gambling market, with online growth the largest driver, as well as an overlap of services and payment mechanisms.
It found the level and types of money laundering risks differed dependent on whether the operator was online or land-based and the combination of payment methods used.
Online casinos and sports betting were found to be more exposed to ML risks than lottery, scratchcards, and other non-casino gambling formats.
The report also highlighted nefarious use of social media by illegal operators, with platforms used to communicate and co-ordinate “illicit activity” including the marketing of illegal gambling and competition manipulation.
On the payment side, e-wallets, virtual assets and mobile money were seen to be “vulnerable” to ML risks, given they allow “rapid, anonymous, cross-border transactions, and the conversion of value into different forms”.
The FATF highlighted challenges faced by supervisors and operators/reporting bodies in the gambling industry.
These include responding to the different regulatory frameworks across multiple jurisdictions, limited information sharing between both the private and public sector and the difficulties in international co-operation.
The guidelines listed best practices shared by jurisdictions, such as “strengthening licensing and registration requirements to prevent criminals controlling gambling operators” and raising awareness of ML and TF risks to service providers and the general public.
It also recommended improving co-operation agencies both formally and informally, especially when it comes to online, illegal and cross-border gambling activities.
The report also listed a range of red flags for operators to track:
- Customers using VPNs or multiple devices; mismatches between claimed and actual location
- Multiple accounts under same or fake names
- Account details not matching deposit/withdrawal payment methods
- Players based in unregulated gambling jurisdictions
- Significant changes in deposit, withdrawal or wagering amounts
- Inactive players returning with unusually large deposits
- High rate of failed deposit attempts
- Inconsistent declared source of funds/wealth
- Structuring deposits to stay under reporting thresholds
- Betting on all possible outcomes
- Betting on events flagged for suspected match-fixing
The FATF also publishes its grey and black lists, which effectively name jurisdictions that are required to be under more intense financial scrutiny.
In early 2024, gambling hub Gibraltar was removed from the grey list. The Philippines, which has a significant industry presence, was removed from the list last year.
The post FATF president urges crackdown on illegal gambling operators first appeared on EGR Intel.
Giles Thomson’s comments follow the financial watchdog publishing guidelines flagging money laundering and terrorist financing risk indicators in gambling
The post FATF president urges crackdown on illegal gambling operators first appeared on EGR Intel.