There is a myth in online gambling which says that money laundering is more susceptible to online casinos than land-based casinos. However, this is not the truth and there is simply no evidence to back up these false allegations. As there are no anonymous cash transactions that take place in an online casino, it is very unlikely that online gambling can be used for money laundering. No examples have ever been found by officials to prove money laundering.
There are claims that the largely unsupervised electronic fund transfers inherent in online gambling are actually being exploited. It is alleged that they are being exploited by criminal interests to launder large sums of money. However, following a US GAO study, it is said that: “Banking and gaming regulatory officials did not view Internet gambling as being particularly susceptible to money laundering, especially when credit cards, which create a transaction record and are subject to relatively low transaction limits, were used for payment. Likewise, credit card and gaming industry officials did not believe Internet gambling posed any particular risks in terms of money laundering.”
The year 2011 was a significant year when discussing online gambling and money laundering, as the U.S. Attorney for the Southern District of New York filed United States v Scheinberg. This was a federal criminal case, which was against the founders of the three largest online poker companies. The three companies that were involved in this case were Full Tilt Poker, PokerStars and Cereus Poker Network (Absolute Poker / Ultimatebet). There was also a handful of their associates involved in the case. The case alleges that the defendants actually violated the Unlawful Gambling Enforcement Act and it is said that they engaged not only in bank fraud but money laundering as well in order to process transfers to and from their customers.
The global legal framework for Internet gambling is actually a very complicated mix of regulations and laws.
The global legal framework for Internet gambling is actually a very complicated mix of regulations and laws. Even though law enforcement agencies have stated that Internet Gambling could possibly be used to launder money, others have definitely viewed the threat as a lot less serious. Findings have stated that the anonymity and jurisdictional issues characteristic of Internet gambling make gambling online potentially a very powerful tool for those wishing to launder money. However, it was later recorded that very few money laundering cases actually involved Internet gambling and few had been prosecuted as a result, but the lack of adjudicated cases against money laundering and Internet gambling has certainly been acknowledged by law enforcement officials due to several factors that included a lack of industry regulations and a simple oversight. Regulatory agencies and officials that were from credit card companies and in the gaming industries did not believe the claims that Internet gambling was any more susceptible to money laundering than any other forms of e-commerce. Regulatory bodies, credit card companies and the gaming industries have expressed mixed views regarding the vulnerability of money laundering and they believed that by eliminating the traditional forms payment methods that included credit cards could potentially heighten money laundering concerns. Law enforcement believes that because of the volume, speed, and international reach of Internet transactions and the fact that many Internet gambling sites are located offshore, this increased the potential of money laundering, but again the fact of the matter is very few cases have actually been brought to a criminal case. The term “offshore” certainly conjures images of tax havens and financial institutions that are located in small island states of the Caribbean or micro-states of Europe. However, “offshore” activities can be much more accurately defined as commercialization of sovereignty.
The Treasury Enforcement also has a strong view on money laundering. They believe one of the main reasons that Internet gambling is vulnerable and other forms of financial crime, which includes tax evasion, is because gambling sites are frequently located in areas with nonexistent or weak supervisory regimes. Concerns have been noted regarding how certain gaming merchants have attempted to circumvent the credit card coding system through factoring. The use of factoring, in appropriate circumstances, is believed to be a key step in facilitating money laundering. This is since factoring is used to disguise from enforcement and regulatory officials the true source of funds and how they were obtained.
According to the FBI, money laundering could be conducted through either legitimate or complicit gambling websites.
The FBI also has certain views when it comes to money laundering in Internet gambling. They claim that money laundering could be conducted through either legitimate or complicit gambling websites. In their opinion, legitimate gambling websites provide an opportunity to transfer high volumes of money in and out of a number of accounts within a single institution. They claim that an individual could potentially deposit illicit funds into a legitimate gambling account online under a falsified name and then go on to wager a small amount in order to make the account appear genuine to the operators of the website. After the individual in question has had a few losses they could then go on to withdraw the rest of the illicit funds from their account. By doing this, the transaction’s “paper trail” would register a lawful Internet gambling transaction, thus mingling legitimate money with illicit money. In addition to this, the law enforcement officials have further suspicions and believe a money launderer would not necessarily have to place a wager in order to “clean” illicit funds. They say that a legitimate online gaming account could be used as a potential storehouse for illicit funds until they are transferred to an offshore account. An example of this would be if a money launderer could locate several legitimate Internet gambling sites that had very few or even no deposit requirements and then go on to deposit the maximum amount at one of the sites or even at more than one. The funds could then be later transferred into an offshore account as so-called legitimate winnings. There were even further beliefs by the enforcement officials that money launderers could develop Internet gambling sites for the sole purpose of laundering money. Operators of these sites could in theory program the casino software to react to passwords and even sign-on commands, automatically taking a percentage of the deposit that is made and cloaking it as a gaming loss. However, in essence, such a deduction would be the operator’s service fee for laundering the illicit funds, but this would also mean that such a site would also require legitimate gamblers to mask the true nature of the operation.
Law enforcement officials have claims and beliefs regarding money laundering and offshore companies. However, gaming industry companies and banking and regulatory officials did not share the same views, especially when credit cards which when used create what’s called a transaction record and are then subject to relatively low transaction limits. These companies do not believe that Internet gambling poses any particular risks regarding money laundering. Credit card companies believe their broad anti-money laundering program and coding system covers potential money laundering through Internet gambling. The program has been designed to address such risks as money laundering, thus ruling out the myth as it allows issuers to block any and all Internet gambling transactions. However, the system does not enable issuers to block transactions that are not properly coded.
In conclusion, gaming industry officials believe that Internet gambling is at no more a risk to money laundering than any other electronic commerce businesses. It has been noted that the financial industry, responsible for the payments system, is actually better suited to monitoring for related suspicious activity in the area than the gaming industry itself.
|
MYTH #4 – ONLINE GAMBLING IS NOT LEGAL
|
