An introduction to Anti-Money Laundering (Part 1)
To understand the rapid changes that are happening in the online gambling industry, we first need to master the basics. This topic will focus on Anti-Money Laundering.
The article is a 3-minute read that summarizes the foundations of what financial crime can do to the industry (and ultimately yourself as a customer), what this law means to us, the consumer, as well as the business world.
What Is Anti Money Laundering?
We start by exploring the basic question, “What is Anti-Money Laundering?”. Anti-money laundering refers to a set of laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income.
Though anti-money-laundering (AML) laws cover a relatively limited range of transactions and criminal behaviours, applying a well-rounded risk-based approach allows for more effective mitigating controls. For example, gambling companies are now, more than ever, expected to understand who their customers are and ensure that they have enough information to satisfy the source of the customer’s income.
AML compliance officers are often appointed to oversee anti-money laundering policies and ensure that banks and financial institutions remain compliant. This also applies to the Online Casinos. In fact, many licensees such as the Malta Gaming Authority, the Swedish Gaming Authority and the UK Gambling Commission, among others, enforce the appointment of a Money Laundering Reporting Officer as part of the necessary requirements for the Casino to obtain said license in the first place.
- Criminals use money laundering activities to conceal their crimes and the money derived from them.
- Anti Money Laundering seeks to deter criminals by making it harder for them to hide the stolen or illegally obtained income.
- Gambling Operators are required to monitor customers’ transactions and report on anything suspicious.
Criminals often try to “launder” the money they obtain illegally through cash heavy businesses such as an Online Casino so that it can’t easily be traced back to them.
Money launderers may also place cash into their gaming account by using stolen cards, non-reputable banks through transfers, anonymous methods like pre-paid vouchers and wallets , deposit cash in smaller increments that are likely to arouse suspicion or use it turn the money over enough to camouflage the real intention behind their gameplay. Launderers will attempt to conceal the money, using dishonest gaming companies who are willing to ignore the rules in the hope of fatter profits.
Money launderers often try to disguise illegally obtained money by running it through a legitimate cash-rich business. It’s ultimately up to the Casino you choose to play with, to monitor their customers’ deposits and other transactions to ensure they aren’t part of a money-laundering scheme. Failure to do so may lead to Casinos receiving warnings, sanctions, big penalties or a revocation of license. The stakes are high for regulated operators to keep crime out of their sites and ensure a safe environment for their customers.
Gaming Operators must verify where large sums of money originated, monitor suspicious activities, and report suspicions to the FIU (Financial Intelligence Unit) after exhausting all leads.
Money-laundering investigations by police and other law enforcement agencies often involve scrutinizing financial records for inconsistencies or suspicious activity. In today’s regulatory environment, extensive records are kept on just about every significant financial transaction. When police investigate financial crime, one of the more effective techniques is re-tracing the records of financial transactions they were involved in.
Besides complying with AML laws, the industry must make sure that clients are aware of them. More needs to be done to increase the education around the subject. Customers are often confused by these new requests and cagey to sending the required proof to continue playing uninterrupted.
AML vs. KYC (Know your customer)
AML operates on a much broader level and are the measures that operators must take to prevent and combat money laundering, terrorism financing, and other financial crimes. KYC is the operator’s way of ensuring that the person who has registered online is who he says he is by requesting proof of identification and residence. This could be in the form of Passport copies for proof of ID and Utility bills for proof of address.
In contrast, AML processes focus more around the customer activity and source of income.
· Anti-Money Laundering rules and regulations are here to stay and will only adapt further in the future to keep up with advancing fraudulent and laundering techniques
· Online Gambling is of higher money laundering risk due to the nature of the business which may see millions in turnover at any one time
· Casino customers will be expected to send in documents proving their wealth were the operator may have detected suspicious activities or were certain thresholds have been reached
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