FATF scrutinizes online gambling and money laundering
An unlicensed operator presenting itself as a legitimate business, offering anonymity, and distributing incentives to attract customers is, for the Financial Action Task Force (FATF), one of the most attractive entry points for money of criminal origin. The organization published its first in-depth study on the inherent risks of illegal online gambling, and the diagnosis is stark: casinos and betting platforms are increasingly being used to launder assets and finance terrorism.
The work took a year to develop and was built with information provided by over 80 jurisdictions, as well as industry bodies and researchers. One of its most disturbing findings relates to scale, as in several markets, the volume of illegal activity equals or even surpasses that of authorized offerings. The FATF links the exacerbation of risk to two self-reinforcing factors: the technological sophistication of platforms and the disparity between national anti-money laundering (AML) and counter-terrorist financing (CTF) regulations.
The report details a catalog of red flags that supervisors and operators should monitor. Among the most frequent are smurfing, which involves fragmenting funds into many small transactions to circumvent control thresholds, money movements entering and leaving an account without any actual bets, and deposits arriving from multiple third-party accounts. The list is completed by the intensive use of cash or virtual assets, abnormally high or coordinated bets on events vulnerable to manipulation, systematic hedging of all possible outcomes of the same event, automated betting patterns, repeated connections via VPNs, and the opening of multiple accounts with false identities.
FATF President Giles Thomson warned that without robust safeguards, these sectors could become a very tempting gateway for fraudsters, professional money launderers, and organized crime networks. In this vein, he urged governments to take note of the indicators set out in the study and to respond with measures proportionate to the risk, ranging from tightening supervision and acting against illegal and offshore operators to expanding international cooperation and strengthening joint work between the public and private sectors.
The warning coincides with a period of review of compliance frameworks in Europe. In the United Kingdom, the Labour Party demanded an investigation into Tether.bet, an unlicensed platform that has since ceased operations, due to allegations related to VIP players and offshore operators, while the Gambling Commission recently raised the money laundering and terrorist financing risk rating for the British gaming software segment to medium.
The FATF is the intergovernmental body that sets international standards against money laundering and terrorist financing. It was established in 1989 at the initiative of the G7, is headquartered in Paris, and its framework of reference is the so-called 40 Recommendations, whose degree of compliance it periodically evaluates in each country. In Latin America, these standards are applied through GAFILAT, its regional body, making this report a direct reference for financial intelligence units and gambling regulators in the region.
Tags: Financial Action Task Force, money laundering in online gambling, unlicensed gambling operators, money laundering red flags