FATF highlights risks to the gambling sector, outlines recommendations

• A new report by the Financial Action Task Force analyzed money laundering, terrorist financing and proliferation financing risks associated with the gambling industry
• The Task Force highlighted a number of risks, acknowledging the severe threat of unregulated, unlicensed offshore gambling
• Several recommendations by the FATF suggest how jurisdictions can improve their response to financial risks

The independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and financing of proliferation of weapons of mass destruction, the Financial Action Task Force (FATF), published a new report focusing on the gaming and gambling industry.

Licensed casinos, betting companies and iGaming operators at risk of financial crimes

In its report, the global watchdog pointed to the growth of the gaming and gambling vertical, highlighted a number of risks and outlined recommendations.

Notably, the FATF examined risks within land-based casinos, betting, gaming and online gambling, acknowledging the increasing number of platforms and payment channels that facilitate such activities.

Per the newly released report, brick and mortar, online casinos and sports betting were considered to be "particularly exposed to money laundering risks."

On the other hand, the FATF said that lotteries, scratch-cards and other non-casino forms of gambling are considered less exposed to money laundering risks in certain jurisdictions.

The global financial watchdog acknowledged that gambling and gaming platforms share structural similarities, although gaming platforms are less influenced or targeted by money laundering attempts.

One of the major challenges when combatting money laundering remains the broad use of payment methods available for gaming and gambling platforms.

Such payment methods include e-wallets, mobile money and virtual assets and cash, vulnerable to money laundering risks and permit fast, anonymous, cross-border transactions that can easily convert ill-gotten money into value via different platforms.

The FATF looked into the role of junket operators, highlighting the decline of such activities but admitting that junkets are still "considered to pose risks relating to the anonymity of players and obscured beneficial ownership of the junket operator."

Equally important, the intergovernmental body stressed that a significant risk to the gambling sector is the illegal and unlicensed offshore gambling vertical.

"The illegal gambling market rivals or even exceeds the legal market in some countries and continues to proliferate, attracting players through promotions and greater levels of confidentiality," the FATF’s report reads.

FATF lists recommendations

Besides analyzing the risks associated with gaming and gambling, the watchdog outlined a number of recommendations.

According to the FATF, strengthening licensing and registration requirements can prevent criminals from assuming control of gambling operations.

At the same time, it said that formal and informal international cooperation between agencies can be strengthened in order to combat online, illegal and cross-border gambling activities.

Equally as important, the FATF recommended improving risk awareness and understanding of money laundering and terrorist financing risks in order to address such threats.

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