Canada’s financial intelligence agency FINTRAC has released a special report detailing how money launderers use online gambling sites. [Image: Shutterstock.com]

A growing concern

The leading financial intelligence agency in Canada has warned that criminal groups are laundering money through online gambling sites. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) outlined this growing concern in a new special bulletin.

It highlighted that the levels of online gambling rose during the recent pandemic and after single-event sports wagering became legal nationwide in 2021. The report looks at online gambling-related suspicious transaction reports from 2016 up to the end of last year. It took into account data from other financial intelligence organizations at home and abroad to try to pick up on any potential patterns and trends.  

attempts to track the movement of shady money

FINTRAC attempts to track the movement of shady money by working alongside banks, insurance companies, money service firms, casinos, and other entities. It passes on information to law enforcement agencies when something suspicious arises.

Many strategies

One of the main ways that FINTRAC discovered that money launderers use online casinos is by trying to disguise the source of the funds by making payments with different types of payment methods. Purchasing prepaid cards using the proceeds of crime is common as these cards do not require the purchaser to provide any personal information.

After depositing the money to an online account with a prepaid card, the person then makes a withdrawal through an e-transfer or wire transfer, telling the authorities that the money is their winnings.

Unlicensed sites usually have their base in jurisdictions that are tax havens or have weak money laundering laws.

Criminal organizations also use potentially dirty money in bank accounts to make very frequent deposits to online gambling sites or transfers to e-wallets that are then used to fund accounts.

FINTRAC noted one instance of an organized crime group laundering money by actually operating its own online gambling platform. The intelligence agency emphasized that sites that accept cryptocurrency payments are of higher risk of facilitating money laundering as virtual currency allows for instant and potentially anonymous payments.

Tips for institutions

FINTRAC has provided some key warning signs to financial institutions to help them spot suspicious account holders. One such indicator is an account that the holder uses exclusively for gambling without showing any everyday transactions.

It also emphasized that these entities should monitor accounts that appear to show a lot of transactions with gambling sites that are not federally or provincially licensed, don’t ask for know-your-customer (KYC) information, fail to show ownership details or information about their registration jurisdiction, and do not limit the quantity or size of wagers.

FINTRAC was created in 2000 through the Proceeds of Crime Act. It aims to detect and investigate cases of money laundering and is now leveraging artificial intelligence (AI) to help fight financial crime.

It’s not just unlicensed platforms that are of concern. FINTRAC found instances of criminals fooling the KYC protocols of licensed gambling platforms through the use of forged documents