FATF warns of emerging risks in gaming, publishes document to help regulators better spot abuse

The Financial Action Task Force, known as the FATF, has issued a document alerting regulators about how to better spot abuse of the gaming and gambling sectors.

The FATF said that analysis it conducted identified new opportunities for criminal abuse in the sectors following an increase in global market size, and payment methods allowing quick anonymous transactions across borders. The aim of the document it published is to help governments, regulators and private sector entities identify and respond to money laundering, terrorist financing and the proliferation of financing risks in the evolving gaming and gambling sectors.

The document underlines that the gaming and gambling industries have changed significantly over recent years and continue to evolve.

“Gaming and gambling establishments and platforms are now part of a broader interconnected value transfer ecosystem with numerous actors, some of which fall outside national anti-money laundering/counter-terrorist financing (AML/CFT) regulatory frameworks. These factors, as well as the varying scope among jurisdictions in AML/CFT regulation of gambling or understanding of gaming risk-exposed activity, have led to developments in the money laundering (ML), terrorist financing (TF) and, to a somewhat lesser extent, proliferation financing (PF) risks associated with the sector," the document reads.

The FATF project identified illegal gambling as one of the most significant risks of the sector. “In many jurisdictions, illegal markets rival or even exceed the size of legal gambling markets.”

It said that illegal gambling operators are prevalent across jurisdictions, and that illegal and unlicensed offshore operators tend to present themselves as a legitimate business, while offering anonymity and incentives. This, it said, can attract consumers as well as criminal actors.

The FATF also noted that technological innovation has led to, among other things, cross-border and multipayment platforms, which has created increasingly complex ecosystems for regulators and law enforcement.

It noted that illegal operators can exploit differences which exist in regulatory approaches across different jurisdictions, and that such differences could create barriers to information sharing between private and public sectors, among other things.

“Without robust safeguards, these sectors can be attractive gateways for fraudsters, professional money launderers and organised criminal networks. I urge all governments to take note of the risk indicators we have set out today, and put in place appropriate risk-based responses - from strengthening oversight and cracking down on illegal and offshore operators, to boosting international co-operation, and deepening public-private collaboration,” Giles Thomson, FATF President, said.

The project identified links between gambling abuse and other offences, including corruption, money laundering networks and the use of unlicensed or illegal operators to facilitate criminal activity.

“The FATF's new risk indicators and accompanying key findings aim to support public and private sector stakeholders by providing practical guidance to identify, assess and respond to suspicious activity,” the FATF said.

Among other things, the indicators highlight behavioural and transactional warning signs associated with crimes like money laundering. “These include the use of multiple accounts and payment methods under different identities, discrepancies between customer and payment information, suspicious identity documents and criminal links involving gambling operators or beneficial owners, including involvement in cyber-enabled fraud and organised crime, suspicious betting and transaction patterns and complex ownership structures that obscure beneficial ownership."