Canada’s financial intelligence agency warns that illicit cash is being laundered through online gambling sites that provide a variety of ways to disguise shady funds.
In a newly published bulletin, the Financial Transactions and Reports Analysis Centre of Canada highlights the criminal exploitation of legitimate and unlicensed digital wagering operations.
The centre, known as Fintrac, notes that the popularity of online gambling increased during the COVID-19 pandemic and was boosted by the 2021 legalization 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 the resulting intelligence about suspected cases to police and other law-enforcement agencies.
In preparing the new bulletin, Fintrac analyzed suspicious transaction reports related to online gambling between 2016 and 2023.
It also reviewed knowledge from monetary intelligence units, evidence from domestic and foreign organizations, and open source data to detect 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.
While unlicensed gambling sites have accounts at monetary establishments in Canada, corporations and Americans who operate those sites have been observed sending money to Canada-based accounts, the bulletin adds.
“Often, such gaming 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 put together a long list of conceivable signs of money laundering through online gambling sites.
For example, he suggested establishments control the use of an account exclusively for online gambling, without any evidence of banking activity.
It also advised them to be on the lookout for excessive transactions with one or more gambling sites that:
— are legal at the provincial or federal level;
— Do not require KYC from users.
— publish the main points of its property or jurisdiction of registration;
– or that have no limits on volumes and values.
This report via The Canadian Press was first published on January 18, 2024.