McAfee has released a report outlining how online gambling sites are being used for money laundering and making it easy for criminals to “cash in” on illegal activities.
The report is titled “Jackpot! Money Laundering Through Online Gambling.”
According to the report, online gambling sites process huge numbers of obscure transactions and cash flows that easily disguise money laundering. Since no actual cash changes hands and no physical product is exchanged, money can be disguised as bets and payoffs.
Gambling winnings are also tax free in many jurisdictions where the sites operate and not reported to any government agencies.
The report also notes that unregistered and unlicensed websites vastly out number licensed, regulated gambling websites around the globe, and stresses that the vast majority of the activity is occurring on illegal gaming sites.
McAfee identified three areas that law enforcement must focus on to curb money laundering.
1. Anonymity—online gaming was initially designed to operate in a commercial trade illegal in many jurisdictions. Operators promise anonymity to online players. In some instances, gamblers are not even required to give any personal information when logging into sites.
2. Payment options—A large number of non-cash options exist for players including credit cards, debit cards, prepaid cards, bank wire transfers, ACH transfers, checks, payment gateways, player-to-player transfers, mobile telephone billing debts and credit. These many options make tracking payments extremely difficult for law enforcement.
3. Too many to police—The sheer number of online casinos is so great that it is difficult for local authorities to monitor them. More than 2,700 sites are in operation worldwide.
“Knowingly or unknowingly, online casino operators are fuelling the increase in cybercrime by making it easy to ‘cash in’ on crimes perpetrated,” said Raj Samani, co-author of the report. “As online casinos grow in popularity—with more games, more access options and more transaction methods—operators are often left unaware to the greater opportunities being provided to would-be, opportunistic criminals who are able to hide their illicit gains from the prying eyes of global law enforcement.
“The odds may appear to be stacked in favor of the cybercriminal, but operators shouldn’t fold or shut up shop just yet,” Samani said. “With a strong online law enforcement capability—reinforced by partnerships and collaborations between cross-border authorities, law enforcement, ISPs, Internet security companies, academia and financial institutions—the online gambling industry can prevent cybercriminals from hitting the jackpot and getting away with it.”
Meanwhile, the report has fueled the debate over whether the U.S. should permit online gambling. A federal bill to ban online gambling in the U.S. has been introduced, leading to a fierce debate in the industry.
Samani says the findings of the white paper have been misrepresented by both anti-online wagering activists and pro-Web gaming backers.
“I feel like I kicked a hornets’ nest,” Samani told the Las Vegas Review Journal. “Unfortunately, there has been some angry debate over the report. The reality is the most of the discussions are irrelevant to the findings.”
