Gambling Commission – money laundering and terrorist threats outlined 

The Gambling Commission has called out operators, mentioning that they are not checking customer data carefully. This has led to concerns over money laundering. Speaking at a recent Gambling Anti-money Laundering Group Training Day event, John Pierce, the commission’s enforcement director, talked about the potential risks with the current systems, specifically the reliance on self-declarations and overall failure to assess customers’ financial backgrounds.

John Pierce did not shy away from pointing out the failings of many operators in conducting rigorous AML assessments. Certain customer triggers proved ineffective at preventing money and, more concerning, terrorist financing risks.

A key deficiency is operators’ inability to properly consider customer salaries and wealth, which results in suspicious spending activity going undetected. In addition, he noted large sums of money being transacted before an AML review was conducted.

Operators’ overall reliance on self-declarations and open-source financial information without verification are at the heart of this deficiency. Pierce said,

“We expect source of funds information to be requested on a risk-based approach, but where this is done, it should not be treated as a tick-box exercise.”

Emerging online threats

Pierce warned of the increasing cyber-crime risks in AML due to artificial intelligence and cryptocurrency transactions. AI identification documents and financial statement forgery are becoming more prevalent.

Additionally, experts noted a rise in ID farming, where hackers collect personal data to open fake gaming accounts. They also noticed the widespread use of mule accounts to launder illicit funds through gambling platforms.

On the increasing role of crypto in online gaming, Pierce said,

“As cryptocurrencies become more common, we expect more payment providers to offer crypto payment facilities. Operators need to have a full understanding of the services provided by their payment providers.”

The way forward

Operators can implement stricter verification of financial documentation as a robust AML procedure. Additionally, they must adopt a proactive approach to monitoring customer behavior. Pierce also urged the establishment of “realistic monetary and non-monetary thresholds” to simplify the identification of high-risk users.

The industry stressed the importance of better staff training in identifying fraud when reviewing documents. This training would be crucial in efforts to spot red flags and effectively verify the source of funds. Pierce stated, “It is key that staff receive sufficient guidance on how to review documents and identify red flags, verify the source of funds information, and record their decision-making.”

In his concluding remarks, Pierce called for the need for collaboration between the industry and the regulator. They committed to promoting engagement in the AML space and facilitating future events to promote engagement.

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