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Most people are aware that money laundering happens, but they don’t quite understand what it means and why historically online gambling has been used as a vehicle for criminals. All countries have had their issues with famous examples of money launderers being Al Capone and Pablo Escobar. So, we’re going to have a peek into the world of money laundering and online casino sites.
There is a big misconception that the modern online casino industry provides a portal for criminals to legitimise their money. Mainly because betting sites can turnover vast quantities of money on a daily basis. This may have been a problem in the past, but the introduction of the UK Gambling Commission (UKGC) and strict regulations have made this difficult.
In 2018 the UK Gambling Commission informed a number of online casinos, that they were failing to complete their due diligence to stop criminals using their site to launder money. The sites were threatened with the loss of their UKGC licence, which meant that they would not be able to provide services in the UK. That’s not to say that money laundering definitively does not happen. But the measures taken by authorities and betting operators has significantly reduced what was a multibillion-pound problem.
What is Money Laundering?
We are all aware that money laundering is illegal, but what exactly is it? Basically, it is the process where ‘dirty’ money which may have derived from illegal activities such as drugs, sex trafficking and even some forms of gambling, is legitimised or ‘cleaned’. What once was questionable monies to the authorities would then be seen as lawful, because there would be evidence of the owner having received the money from legal activities.
The process of money laundering is quite complex and can be done in a number of ways. But one of the more popular methods is by filtering the money through businesses, so it appears as earnings. Because companies and authorities are more aware of the tricks used, money launderers are having to adapt what they do and become more creative. Thankfully, the gambling sector has a number of safeguards in place to keep the industry reputable.
Safeguards to Stop Money Laundering on Online Gambling Sites
Identification Checks (Know Your Customer)
One of the best ways to reduce illegal activity online is to require players to provide personal information, which ties the person to the money. It also allows the casino to monitor what the player is doing, for example do they remove the funds they added rather than play the games.
UK sites are now required to complete a robust process which has been named ‘know your customer’. This is used to confirm the players age, name and address, and requires evidence of the following documents.
- To verify your identity and age, the gambling site will require an active government issued ID such as a passport or driving licence.
- For the proof of address requirement, the operator will require either a utility bill or a bank statement. The document has to be dated within the previous three months to be valid.
The gambling site you use may also complete a soft credit check, which will not affect your credit score or leave any traces on your record. Although these documents and checks are the required standard, the casino you have chosen may ask for additional information. Each site will want to ensure they have done their due diligence to appease the UKGC and as such they may need additional documents to guarantee the verification is completed.
There are occasions when you may need to complete a financial verification and as such the site will require documents which show proof of earnings. This again links back to money laundering and establishing that the money you deposit has been acquired legally. The casino will normally accept one document from a variety of options which include payslips and bank statements.
The main outcome for people who attempt to launder money through online casinos, is to get their money back as quickly as they can and make it look like winnings. But also, they want to get as much back of the original amount deposited as possible, which is why wagering requirements can be a problem for them.
Wagering requirements is a condition applied to any bonuses or promotions that you take part in. By accepting the bonus, you are also accepting that the amount of free credit given will have a multiplier attached to it. To be able to withdraw any funds, you have to have credited through the multiplied amount. So, for example if the bonus credit is £10 and the multiplier is 65x, then the amount you need to wager through is £650.
The fact that you have to bet through a certain amount of money is quite risky for a money launderer and can take some time. Both of these are problems for people wanting to move large quantities of money at speed.
Maximum Bet Limits
Most online casino sites will impose minimum and maximum deposit limits no matter the banking method that you use. For money launderers the minimum amount won’t be a factor, but obviously a maximum amount will be. Regular big deposits can trigger an audit by the casino, which will require that you provide financial information. Again, another element which can deter criminals from using gambling sites, as they wouldn’t want anyone looking into their records too closely.
Deposit limits are not only affected by the casino site itself, but also by the banking method used. Both the site and financial institutions are highly regulated which makes using them a risk.
Cryptocurrency in Online Gambling and Money Laundering
Once renowned for helping criminals launder money online, cryptocurrency such as Bitcoin have become increasingly difficult to manipulate. This is mainly due to the fact that to transfer your money from cryptocurrency to funds in the bank, you must provide personal details and set up an account. The need to verify documents as you set up the account removes the anonymity preferred by money launderers.
Summary of Money Laundering and Online Casino Sites
The takeaway from all of this is that online UK casinos must ensure that they comply with the UK Gambling Commission in regards to money laundering regulations, under the Proceeds of Crime Act 2002. This is not only to protect their players, but also to ensure wider economic stability. All gambling sites have a responsibility to validate an online player, so although it may seem frustrating, there are legitimate reasons. Should the site be concerned about a player then it is their duty to report them for possibly gambling with proceeds of crime. Making sure that the gambling sector has a reputation of credibility is important to the industry as a whole. The steps which have been taken will not only protect the casinos, but also the players too and that’s good for everyone.