Canada’s monetary intelligence firm warns that illicit money is being laundered through online gambling sites that offer a variety of tactics to hide shady funds.
In a recently published newsletter, Canada’s Financial Transaction and Reporting Analysis Centre sheds light on the criminal exploitation of legitimate, unlicensed virtual transactions.
The hub, known as Fintrac, notes that the popularity of online gambling increased during the COVID-19 pandemic and was boosted by the legalization in 2021 of single-event sports betting in Canada.
FINTRAC identifies money related to illicit activities by electronically filtering millions of data each year from banks, cash companies, casinos, insurance companies, securities dealers, real estate agents, and others.
It discloses data on suspicious cases to the police and law enforcement agencies.
In the new bulletin, FINTRAC analyzed suspicious transaction reports similar to iGaming between 2016 and 2023. It also reviewed insights from other monetary intelligence units, tests from domestic and foreign organizations, and open-source data to identify trends and patterns.
“Online gambling sites offer would-be cash launderers the opportunity to hide the source of their budget through other deposit and withdrawal methods,” the bulletin said.
Fintrac found a common tactic was the purchase of prepaid cards or vouchers using suspected proceeds of crime. They were then used to deposit money into gambling accounts, followed by withdrawals through wire or e-transfer to a Canadian bank account under the guise of winnings.
Bank accounts also provide a way to deposit and overlay proceeds of crime through licensed and unauthorized online gambling sites, according to the bulletin.
For example, bank deposits that could possibly be related to crimes such as drug trafficking and human trafficking have been depleted through quick and common online gambling purchases or transfers to payment service providers known to facilitate transactions on gambling sites.
“It appears that other accounts exist primarily to facilitate cash laundering through online gambling activities,” the bulletin said. “This included transactional activities that gave the impression of being circular in nature, where budget was gained and returned times to the same gambling sites. “
In one case, an organized criminal organization laundered the proceeds of crime by operating an unlicensed game through accounts of unrelated companies, Fintrac says.
Although unlicensed gambling sites have accounts at monetary establishments in Canada, businesses and Americans who operate those sites have been observed sending money to accounts founded in Canada, the bulletin adds.
“Often, those gambling corporations are located in jurisdictions with weak anti-money laundering regimes, engage in highly secretive banking activities, and offer tax haven capabilities. “
Fintrac’s investigation helped the company compile a long list of conceivable signs of money laundering through online gaming sites.
For example, he suggested establishments control the use of an account exclusively for online gambling, without any evidence of banking activity.
He also begged them to be on the lookout for exaggerated transactions with one or more gambling sites that:
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