Canada’s Financial Transactions and Reports Analysis Centre (Fintrac) recently raised concerns about the exploitation of online gambling platforms for money laundering purposes.
The popularity of online gambling has soared, especially during the Covid pandemic, as people sought entertainment from the safety of their homes. This surge in online gambling activity, coupled with the legalization of single-event sports betting in Canada, has created an opportune environment for money launderers, Fintrac said.
Fintrac plays a crucial role in identifying money linked to illicit activities by sifting through vast amounts of data from various financial institutions. In their analysis, Fintrac examined suspicious transaction reports related to online gambling between 2016 and 2023. They also gathered insights from other financial intelligence units, domestic and international organizations, as well as open sources, in order to identify trends and patterns.
One common tactic observed by Fintrac was the use of prepaid cards or vouchers to deposit funds into gambling accounts. These prepaid instruments are purchased using suspected proceeds of crime and provide money launderers with a convenient method to disguise the source of their funds. Subsequently, funds are withdrawn through wire transfers or electronic transfers to Canadian bank accounts, masquerading as legitimate winnings.
Bank accounts serve as another avenue for money laundering through licensed and unlicensed online gambling sites. Criminals employ various techniques, such as rapid and frequent online gambling purchases or transfers to payment service providers known for facilitating transactions at gambling sites. This approach allows them to deplete funds linked to criminal activities, such as drug dealing and human trafficking, while maintaining a facade of gambling-related transactions.
Fintrac’s analysis has shed light on the involvement of unlicensed gambling sites in money laundering schemes. Although these sites may not hold accounts at financial institutions in Canada, the entities operating them have been observed sending funds to Canada-based accounts. This highlights the global nature of money laundering through online gambling and the challenges faced by regulatory authorities in combating this issue.
In light of their analysis, Fintrac has compiled an extensive list of possible indicators that can help financial institutions and law enforcement agencies identify money laundering through online gambling sites. These indicators include:
- Exclusive use of an account for online gambling, with no evidence of everyday banking activity.
- Excessive transactions with unlicensed gambling sites that lack proper authorization and do not require user identification.
- Lack of transparency regarding ownership and jurisdiction of registration for the gambling site.
- Absence of limits on the volumes and values of bets placed on the site.
