FATF warns gaming and gambling platforms face financial crime risks

MUMBAI: The stakes are rising beyond the gaming table, with criminals increasingly turning gaming and gambling platforms into channels for moving dirty money, the Financial Action Task Force (FATF) has warned.

In a report released on September 9, the global financial crime watchdog outlined risk indicators to help governments, regulators, financial institutions and gaming companies spot suspicious activity. The review draws on information from more than 80 jurisdictions, industry bodies and researchers.

FATF said criminals are increasingly using gambling platforms not to gamble, but to move illicit funds through them. The rapid growth of online platforms and payment methods that can shift money across borders in seconds has added another layer to the problem.

Illegal and unlicensed gambling operators emerged as one of the biggest risks in the review. FATF said illegal gambling markets can rival or even exceed legal markets in some jurisdictions, while offshore operators may present themselves as legitimate businesses while offering anonymity and incentives attractive to both consumers and criminal groups.

The online nature of the sector makes enforcement harder, too. Platforms can operate across jurisdictions with different rules, complicating regulatory oversight, investigations and the sharing of information.

Among the warning signs flagged by FATF is the use of multiple accounts or payment methods under different identities. Numerous small transactions, known as “smurfing”, can also be used to stay below detection thresholds.

Other red flags include mismatches between customer information and payment details, suspicious identity documents and unusual transaction patterns. Large or coordinated bets could also warrant scrutiny, particularly where they appear connected to the manipulation of sporting or other competitive events.

The watchdog’s review goes well beyond traditional casinos. It covers online gambling, video gaming, payment channels and their links with the wider digital economy, where cash, e-wallets, mobile money and virtual assets can provide potential entry points for illicit funds.

Speed is part of the attraction and the headache. Rapid cross-border transactions can make it harder for financial institutions and authorities to follow money trails before funds are moved again.

FATF also highlighted risks linked to who actually owns and controls gaming and gambling businesses. Complex corporate structures and shareholding arrangements can make it difficult to identify the individuals ultimately controlling a platform.

FATF President Giles Thomson said gaming and gambling businesses could become gateways for fraudsters, professional money launderers and organised criminal networks when adequate safeguards are absent.

The watchdog is calling on governments to strengthen oversight, take action against illegal and offshore operators and improve cooperation between regulators, law enforcement agencies and private-sector companies.

For businesses, the new indicators offer a framework for detecting suspicious behaviour earlier as gaming, gambling, digital payments and virtual assets become increasingly intertwined.

The report also fits into FATF’s wider scrutiny of newer routes for illicit finance. Earlier this month, the watchdog warned about the growing misuse of underground banking and hawala networks by professional money-laundering services.

As the digital economy makes money move faster, FATF’s message is that financial crime is keeping pace and sometimes getting there first.