Illegal Online Gambling Sites The Target Of Money Laundering Schemes

Written By Matthew Lomon on January 18, 2024
Inside of a washing machine with the water running and a pile of $100 Canadian bills to indicate money laundering in connection to a story about Fintrac issuing a warning that illegal online gambling sites are being used by organized crime for money laundering.

Another reason to only gamble with a regulated site: A recent report from Canada’s financial intelligence agency revealed that illegal online gambling sites have become a vehicle for criminal organizations for laundering money.

On Jan. 18, CBC News reported on a special bulletin from the Financial Transactions and Reports Analysis Centre of Canada warning the public that racketeers are manipulating transaction systems as a means of washing illicit funds.

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

Fintrac’s latest analysis specifically covered suspicious online gambling-related transaction reports from 2016 to 2023. It cross-referenced its findings with related financial intelligence branches, as well as domestic and international organizations to uncover potential trends.

While Thursday’s bulletin noted that legal, regulated Canadian online casino sites were also exploited, unregulated operators were its main target.

The agency procures its reports by identifying cash connected to unlawful activities through a digital audit of millions of pieces of information each year. This includes data from banks, money-service businesses, casinos, insurance companies, securities dealers, and real estate brokers.

How organized crime groups are laundering money

According to the bulletin, there was a common theme among law evaders on unregulated gambling sites.

The tactic involved purchasing prepaid cards or vouchers with funds believed to be proceeds of crime. Perpetrators would then use the cards to deposit money into gambling accounts, soon after withdrawing it through wire or e-transfer to a Canadian bank account “under the guise of winnings.”

In other instances, an organized crime group took things a step further by operating its own unregulated site.

Here, Fintrac says, the syndicate have been laundering crime proceeds using the accounts of unrelated businesses. In Canada, unlicensed gambling sites are not eligible to hold accounts at financial institutions. However, the companies and individuals operating these illicit sites were observed sending money to Canadian-based accounts, per the bulletin.

Further, Fintrac’s findings cited relaxed jurisdictional safeguards as the reason unregulated sites are so appealing to organized crime groups.

“Frequently, these gaming companies are located in jurisdictions that have weak anti-money laundering regimes, engage in highly secretive banking, and provide tax haven capabilities.”

Other suspicious activity noted in the report included sudden changes in depositing and withdrawal activity. For example, abrupt and uncharacteristic spikes in deposits.

Fintrac’s report further proof legal, regulated sites are safest choice

Criminals targeting any kind of activity, regulated or not, for means of personal or financial gain is inevitable. That sentiment applies here with regulated online gambling sites, as it does equally in most other sectors.

Despite their inclusion in Fintrac’s report, albeit to a lesser extent, regulated gambling sites remain the unequivocal safest and most secure option for those who choose to wager online. From safe and secure transactions to protection of personal and banking information and more, regulated sites are the logical choice.

PlayCanada keeps a live list of all regulated Ontario online casino and/or sportsbook operators. Currently, Ontario is home to 52 live operators running more than 70 separate online gambling sites. So, if you’re gambling in Ontario and a site isn’t on this list, it’s not legal.

Although third-party operators are not yet available in the rest of Canada, each province offers its own online gambling option through its provincial lottery operator.

Photo by PlayCanada
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Matthew Lomon

Matthew Lomon has been a contributor at Catena Media’s network of regional sites since July 2022. He first broke into covering the legal North American gambling industry with PlayCanada. Since then, Matthew's reporting has extended to PlayMichigan, PlayPennsylvania, and PlayIllinois. Based out of Toronto, Ontario, Matthew is an avid (bordering on fanatic) sports fan.

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