Canada’s currency intelligence firm warns that illicit money is being laundered through online gambling sites that offer tactics to hide shady funds.
In a recently published newsletter, Canada’s Financial Transaction and Reporting Analysis Centre sheds light on the criminal exploitation of legitimate, unlicensed virtual transactions.
The hub, known as Fintrac, notes that the popularity of online gambling increased during the COVID-19 pandemic and was boosted by the legalization in 2021 of single-event sports betting in Canada.
FINTRAC identifies money related to illicit activities by electronically filtering millions of data each year from banks, cash companies, casinos, insurance companies, securities dealers, real estate agents, and others.
It discloses data on suspicious cases to the police and law enforcement agencies.
In the new bulletin, FINTRAC analyzed suspicious transaction reports similar to online gambling between 2016 and 2023.
It also reviewed the knowledge of monetary intelligence units, tests from domestic and foreign organizations, and open-source data to detect trends and patterns.
“Online gambling sites offer prospective money launderers opportunities to conceal the source of their funds by using multiple different deposit and withdrawal methods,” the bulletin says.
FINTRAC found that a common tactic was to purchase prepaid cards or vouchers suspected of being the proceeds of crime. They were then used to deposit cash into gaming accounts, followed by withdrawals through a bank or wire transfer to a Canadian bank account under the guise of winnings.
Bank accounts also provide a means of positioning and consolidating proceeds of crime through licensed and unauthorized online gaming sites, according to the bulletin.
For example, bank deposits that could possibly be related to crimes such as drug trafficking and human trafficking have been depleted through quick and common online gambling purchases or transfers to payment service providers known to facilitate transactions on gambling sites.
“It appears that other accounts exist primarily to facilitate cash laundering through online gambling activities,” the bulletin said. “This included transactional activities that gave the impression of being circular in nature, where budget was gained and returned times to the same gambling sites. “
In one case, an organized criminal organization laundered the proceeds of crime by operating an unlicensed game through accounts of unrelated companies, Fintrac says.
Although unlicensed gambling sites may not hold accounts at financial institutions in Canada, the companies and individuals that operate these sites have been observed sending funds to Canada-based accounts, the bulletin adds.
“Often, those gambling corporations are located in jurisdictions with weak anti-money laundering regimes, engage in highly secretive banking activities, and offer tax haven capabilities. “
Fintrac’s investigation helped the company put together a long list of conceivable signs of money laundering through online gambling sites.
For example, he suggested establishments control the use of an account exclusively for online gambling, without any evidence of banking activity.
He also urged them to be alert for exaggerated transactions with one or more gambling sites that:
— are legal at the provincial or federal level;
— Do not require KYC from users.
— publish the main points of its property or jurisdiction of registration;
– or that have no limits on volumes and values.