In a statement from this week, the Financial Transactions and Reports Analysis Centre of Canada has shed light on the use of online casinos as a means to launder money by criminals. Fintrac shared that the popularity of online gambling spiked during the unprecedented situation and has additionally been fueled by the legalization of single-event betting in Canada back in 2021.
Fintrac is an agency that identifies money connected to illegal activities by digitally examining millions of pieces of data annually from banks, money-service businesses, casinos, insurance companies and others. For its latest bulletin, the regulatory body assessed suspicious transaction reports in connection to online gambling activities between 2016 and 2023.
Findings from the Bulletin
Fintrac asserts that iGaming websites offer potential money launderers opportunities to obscure the source of funds through diverse deposit and withdrawal methods. It found a common practice involved individuals purchasing prepaid cards or vouchers with suspected illicit funds, depositing them into gambling accounts, and then withdrawing the funds via wire or e-transfer to a Canadian bank account.
Bank accounts also enabled a way of placing and layering proceeds of crime via licensed and unlicensed online casino sites. For example, bank deposits that may be related to crimes such as drug dealing and human trafficking were often masked by rapid and frequent online gambling purchases or transfers to payment service providers, known to perform gambling site transactions.
While unregulated iGaming platforms may not have accounts at financial institutions across the country, the companies and individuals that operate these sites have been spotted sending funds to Canada-based accounts. It was reported that regularly these gaming firms are situated in territories that have weak anti-money laundering regimes, and provide tax haven capabilities.
Fintrac urges institutions to monitor for use of an account exclusively for online gambling, with no evidence of everyday banking activity. It also advises them to be on high alert for excessive transactions with one or more gambling sites that are not provincially or federally licensed, do not require KYC for users, do not post details of ownership or registration and have no limits on bets.
Money Laundering via Gambling is Not New
In Canada, the illicit use of gambling as a means to launder money is not an uncommon practice among criminals. On the topic, RCMP’s Project Doom discovered a case involving a Winnipeg man. The individual was implicated in trafficking drugs into remote First Nations communities in Manitoba, and attempted to launder significant amounts of illegal proceeds by channeling them through casinos in the city.
Quebec has also had its fair share of crime waves at casino properties. Then, in the summer of 2023, the province announced a new regulation which prohibited people convicted of crimes such as money washing and forgery from stepping foot at its casinos. All legal gaming amenities in the province are owned by Loto-Québec, with the exception of those owned by Indigenous communities.
Source: Bronskill, Jim “Money launderers using online gambling sites, Canada’s Fintrac warns” Global News, January 18, 2024
