Report says unlicensed online gambling used for money laundering
By Joe Lo
port by internet security company McAfee has warned that the number of unlicensed gambling websites is growing and that they are being used by criminals for money laundering.
Gambling is attractive to money launderers for three reasons, the firm claims. Firstly, gambling involves a huge volume of transactions and cash flows, which can disguise money laundering. Secondly, it does not involve a physical product which makes it harder to track the flow of money and prove a disparity between real and virtual turnover. Thirdly, gambling winnings are tax-free in many countries.
Criminals can bet their ill-gotten gains and get their money back 'clean' as seemingly legitimate winnings. Player-to-player transfers can also be used to make payments for illegal goods. A drugs buyer could pay a drugs seller in this manner, for example.
The document claims that "a significant percentage" of global gamblers use unlicensed websites. They cite a study by Monaco iGaming Exchanges which estimated that in 2011 there were 25,000 such pages on the internet.
Unlicensed websites are appealing to money launderers because, unlike licensed websites, they have no obligation to record and report suspicious activity by their customers.
Unlicensed sites also do not require players to deposit funds through licensed financial institutions that are subject to anti-money laundering regulations.
Anonymity is a major advantage of online gambling to money launderers and the report shows that certain websites are explicit about the anonymity they can offer. Seals With Clubs, for example, on their website say they "flatly reject the idea that an online poker room should require your personal information". The Tor network, on which gambling sites operate, can also be used to become anonymous online.
Criminals can also use proxy servers and virtual private networks (VPNs) to make it appear as if their internet connection is from a different city or country. This is how many American gamblers get around laws in most American states that outlaw online gaming. You can buy VPNs that make it appear as if you are from New Jersey, one of the few American states where online gambling is legal.
The report also warns that many services now exist to help gamblers hide their money from law enforcement, usually going hand-in-hand with the online Bitcoin currency.
It seems to be good news for money launderers but the report ends with some advice for them. It warns of the propensity of unlicensed gambling websites not to pay. Clone websites and scams are also in operation so criminals may end up being conned themselves.