Money Laundering

“It is a process in which illegal funds are shielded, broken the link with the original source, given a new legitimate one. Simply black money is converted into white or illicit proceedings are legalized in this practice.”

Among all financial crimes, AML compliance is considered to have the highest intensity. It not only distorted the system but also encouraged other crimes. Money laundering has weakened the economies of different countries. The funds are transferred across the borders, through which the government can’t estimate the actual amount of money in their jurisdictions. They can’t design their annual budget efficiently because of this. The smooth flow of funds going through banking channels is not possible if they are used for money laundering.

The money laundering cycle can be broken down into three distinct stages; however, it is important to remember that money laundering is a single process. The stages of money laundering include the: Placement Stage. Integration Stage. The Placement Stage. The placement stage represents the initial entry of the 'dirty' cash.

Usually, the money is laundered in three stages. The crime groups loan money to high rollers and hire low-level members to gamble with small amounts. Those convert the cash into casino chips, gamble with parts of it for a while and then cash them out in form of legal checks or cash with a receipt proving they won the amount. The steps are as follows for money laundering:. History of Gambling & Casinos in the U.S. Explore both the stages of candidate recruitment and selection and discover how modern police. There are 3 stages of money laundering. In the first stage, money enters the banking system. This stage is termed as placement. Second phase involves mixing the funds. Casino patron brought $1.8M in cash to casino in just 7 days, inquiry hears. Lottery Corporation’s one-time director of anti-money laundering and investigations faced a grilling.

How Casinos are Used for Money Laundering: Explained with Stages

The short-term procedure to turn small amounts of funds into a huge amount without alarming the police authorities. Gambling or betting is one of the ways that can be used for this motive. Because of this, casinos attract money launderers. A lot of ill-gotten funds are used in gambling and carried out from the other side as legitimate i.e. “winnings”. Typically, this approach has some associated risks. Despite this, if the whole amount can’t be extracted a small proportion is still acceptable. Online casinos or online gambling games provide an additional benefit i.e. anonymity of players. It means that one criminal can open numerous gaming accounts.

The casino approach operates by injecting the funds through gambling games. In casinos, chips are bought using illegal funds, which are then concisely played and converted back into cash. A money launderer himself converts the chips or uses his representative. In most cases, money launderers use foreign casinos. This raises the difficulty for law enforcers to collect evidence of money laundering.

Money laundering is done through three stages discussed below:

Placement

The illegitimate funds are placed in casinos by giving them to the agent. He takes the cash to the casino and buys chips against them. Sometimes websites give free chips on every new account opening. This makes it easier to purchase chips without leaving any record. The criminals are in search of ways like this where they can buy casino chips from sources other than casinos.

Structuring

Layering is done in gambling by taking the cash or chips into the casinos and used for playing betting games. Money launderers play smartly and use only a little portion of the chips because there is uncertainty in gambling games. Therefore, they use chips for a few hours and convert them back into cash.

Receipts from casino cashout are used as evidence of the fund’s legitimacy. Casinos do not have a proper record of how many chips are bought, played, win or lose and converted back. Thus, money launderers can claim any amount of winning.

Integration

In other methods, this stage is very sensitive but in casinos, it is the easiest one. Once the winning has reported and all the taxes are paid, the illegal money is legal now. The UBO can use this money easily in the financial system without any fear of getting caught.

AML Compliance for Online Casinos

To stay compliant with the latest AML regulations and laws, and provide protection to their players, casinos need an efficient AML program. Know your customer (KYC) verification along with anti-money laundering watchlist screening can help in that.

Know Your Customer

Money Laundering Integration

Every new player who wants to open a gambling account must be verified by giving his government-issued id documents. His name and other information are retrieved through the document. It helps in having legitimate and authentic customers, erasing anonymity additionally.

AML Screening

Then the name of the player is checked against global watchlists or sanction lists. These lists contain the data of criminals and potential money launderers. Upon finding the name in any of the lists, the players will be allowed to gamble.

Wrapping it Up

Governments are also planning to take the gambling business under the AML umbrella. UK, France, Italy, and Spain have proposed AML regulations on gambling. Online casinos can clean their channels from financial crimes using a robust and automated AML program.

Gambling Commission January 2018 letter to all online casino operators

Following a review of the online casino sector to consider how well operators are meeting their current obligations, the Gambling Commission has written (January 2018) to all online casino operators expressing concerns about the sector’s approach to anti-money laundering and social responsibility. In the letter the Commission sets out how it expects operators to review all of their processes aimed at tackling money laundering and meeting their social responsibility obligations.

Due to the serious nature of the Commission’s findings, it has already begun investigations into 17 online operators, and is considering whether five of these require a licence review. None of the operators under investigation has been named by the regulator.

The following is an overview of a casino operator’s responsibilities under The Proceeds of Crime Act 2002 (“POCA”), The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“The 2017 Regulations”), and the money laundering guidance and advice issued by the Gambling Commission. Unless otherwise stated, it is relevant to all casino operators, terrestrial and on line. It is an introductory overview only, and should not be taken as an alternative short-cut to becoming familiar with the Act itself and the Regulations and the Commission’s various publications, which must be read in full and re-read as they are amended or updated.

Casinos and Money Laundering: an overview

Introduction

The Gambling Commission has identified three stages in a typical laundering of criminal proceeds:

placement – this is the initial placing of the money (such as the cash proceeds of a drugs deal) into the financial system.

layering – this is when the source of the criminal proceeds is disguised by creating complex layers of financial transactions which obscure the audit trail.

integration – this is when the laundered money (now looking clean) is integrated into the legitimate financial system, and assimilated with other assets.

Casinos are amongst those businesses in which there is said to be the highest risk of money laundering taking place. The Gambling Commission points out: “the land – based gambling industry is particularly vulnerable during the placement stage as the use of cash is prevalent and the provenance of such cash is not always easy to determine“. On the other hand, online casinos could be said to carry their own particular risks arising from the ease with which transactions may be conducted with anonymity.

POCA and the 2017 Regulations place a miscellany of duties on casino operators (and those employed by them) with the aim of preventing and/or detecting attempts by customers to launder money. Upon the detection or reasonable suspicion of money laundering, there are various reporting

Money Laundering Stages Casino