Fintrac warns: Online gambling sites used as hubs for money laundering

Canada's Financial Transactions and Reports Analysis Center (Fintrac) has issued a warning about the worrying increase of money laundering under the guise of online casino gambling that has been suspected in the last few years. 

This increased risk has been highlighted in a recently released bulletin in which Fintrac cautions financial entities to be vigilant for money laundering methods employed through online gambling.  

With regards to this, Fintrac has analyzed a variety of suspicious transaction reports taken place during the period of time between 2016 and 2023.   

The analysis of the transaction reports related to online gambling revealed some very significant findings

In the statement released by Fintrac, the following was highlighted

“Online gambling sites offer prospective money launderers opportunities to conceal the source of their funds by using multiple different deposit and withdrawal methods.” 

In addition to this, Fintrac’s report states the following: 

“A commonly observed typology involved the purchase of prepaid cards/vouchers using suspected proceeds of crime, which were used to deposit funds into gambling accounts, followed by withdrawals through wire or e-transfer to a Canadian bank account under the guise of gambling winnings.” 

Fintrac’s bulletin not only points out the use of pre-paid cards or vouchers as a common money laundering tactic, but also remarks on the vulnerable state of bank accounts when faced with the process of money laundering: 

“Bank accounts provide a crucial step in the placement and layering of proceeds of crime through licensed and unlicensed online gambling sites.” 

In this way, it is evident that the role of banking systems in the money laundering process should not be undermined

“An organized crime group laundered proceeds of crime by operating an unlicensed gambling site through the accounts of unrelated businesses.” 

Another example that Fintrac points out is the practice of money laundering through the creation of shell online gambling sites

“Other accounts appeared to exist mainly to facilitate money laundering through online gambling activity. This included transactional activity that appeared circular where funds were received and sent back to the same gambling sites multiple times.” 

Fintrac ends its report by cautioning financial entities to be vigilant for money laundering practices through the activity of online gambling, depicting the sophisticated methods employed by money launders and criminal organizations in successfully exploiting online gambling platforms

In addition to this, Fintrac lists a detailed account of the ways in which said vigilant individuals ought to be able to detect any activity related to money laundering.  

The specific signs that financial entities ought to be on the lookout for, remarks Fintrac, include accounts used solely for online gambling.  

Finally, accounts used as a means to make excessive transactions though online casinos that lack any regulatory compliances should also arouse considerable suspicion

About the authorMelanie Cazenave
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