The biggest difference on how the gaming and gambling industry has changed over the years is due to the expansion of online, cross-border, multi-product and multi-payment platforms. The industry is now part of a broader inter-connected value-transfer ecosystem with numerous actors that are ever evolving, says the Financial Action Task Force (“FATF”) in its recent report on the gambling and casino industry.
The Report offers an updated analysis of the money laundering (“ML”), terrorist financing (“TF”) and to a lesser extent proliferation financing (“PF”) risks posed by the casino, gambling and gaming sector. Due to the rise in the online use of this sector, and an overlap of services and payments mechanism involved (i.e., cash, card, bank transfer, virtual assets, mobile money, third-party intermediaries and money or value transfer services), the risks of being exposed to ML/TF/PF have risen due to the cross-border customer bases and flow of funds via digital means. Notwithstanding this, due to the online nature of the industry, it is also increasingly interlinked with social media and other digital platforms which make it susceptible to money laundering risks because it can be used as a tool to communicate and co-ordinate illicit activity.
The Report states that there are certain challenges in addressing the above-mentioned issues as the scope of AML supervision and distribution of oversight responsibilities, licensing regimes and market entry controls differ from country to country. The issue is clear that relevant supervisory bodies’ regulatory framework does differ across jurisdictions which enables regulatory arbitrage by gambling operators and more.
The FATF therefore provides the following recommendations in order for jurisdictions to strengthen their response to the ML/TF/PF risks of gaming and gambling, which include the following:
- Improving risk awareness and understanding given the evolving and technologically integrated nature of the sector and applying a risk-based approach in line with Recommendation 1 of the FATF Standards to mitigate the risks identified.
- Strengthening licensing and registration requirements to prevent criminals controlling gambling operators
- Raising awareness of risks to service providers and to the general public, particularly on illegal and unlicensed offshore gambling
- Strengthening formal and informal international co-operation between agencies, especially in relation to online, illegal and cross-border gambling activities
- Considering developing or strengthening public-private partnerships to enhance information sharing and enable quick responses to emerging and evolving risks.
In addition to the above, the Report also includes a non-exhaustive list of specific red flags to look-out for in relation to ML/TF/PF. The FATF enforces that a single risk indicator alone is not necessarily a clear indication of the above, although it can serve as a useful prompt into further investigation when and where appropriate.
To read the mentioned list, please click here.
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