Gambling Commission outlines money laundering, terrorist threats
The Gambling Commission has identified critical trends and emerging threats in the realm of anti-money laundering (AML) within the betting sector, indicating that operators are insufficiently scrutinizing customer data.
During the Gambling Anti-Money Laundering Group Training Day on February 12, Gambling Commission enforcement director John Pierce delivered key insights regarding the current state of AML practices in the industry.
To fortify AML frameworks, the Commission has urged operators to thoroughly assess customer profiles and monitoring procedures. This enhancement aims to ensure that customer risk profiles incorporate the “full range of risk,” taking into account factors such as transaction patterns, geographic locations, and product-specific risks.
Pierce highlighted that various “customer triggers” currently employed are inadequate in addressing the risks associated with money laundering and terrorist financing.
One critical area of concern is the failure of procedural assessments to duly consider factors such as a customer’s salary and wealth, which can obscure irregular spending behaviors.
The Commission has observed that operators frequently “over-rely” on self-declarations and publicly available information when evaluating potential money laundering and terrorist financing activities.
Moreover, a significant oversight includes allowing substantial monetary transactions before conducting any thorough customer AML review.
Operators are also increasing their exposure risks by neglecting to verify their own data and relying solely on financial indicators.
Pierce advised that operators should institute “realistic and effective monetary and non-monetary thresholds” for determining when additional customer information should be solicited. He stressed the importance of initiating proactive dialogue with customers early in the relationship.
The Commission has noted a troubling trend where operators are not adhering to their own procedures regarding the acquisition of source-of-funds information during the review process.
“We expect source-of-funds information to be requested on a risk-based approach; however, where this does occur, it should not be treated merely as a tick-box exercise,” Pierce commented.
He emphasized that it is crucial for staff to receive comprehensive guidance on reviewing documentation, recognizing red flags, verifying source-of-funds information, and documenting their decision-making processes.
Emerging Online Threats
Pierce also addressed several emerging threats that are gaining traction, notably the rise of cryptocurrency and artificial intelligence (AI).
He noted a notable increase in the use of AI by customers to fabricate identification documents and falsify source-of-funds information.
The Commission has detected a rise in “ID farming,” a tactic by cybercriminals who gather personal information to obtain bank accounts that are subsequently used to create gaming accounts.
The prevalence of mule accounts—user accounts specifically designed for money laundering—has also surged, alongside an increase in fraudulent activities within the betting environment.
Pierce reiterated that, while cryptocurrencies are not a newly identified risk factor, the challenges they pose continue to escalate.
“As cryptocurrencies gain prominence, we anticipate that more payment providers will offer crypto payment options. Operators must have a comprehensive understanding of the services rendered by their payment providers,” Pierce concluded.
Earlier this month, the Gambling Commission reported a 21% year-on-year increase in the online gross gambling yield in Great Britain during the fourth quarter of 2024, reaching £1.54 billion (€1.85 billion/$1.92 billion). Additionally, overall online bets and spins rose by 8% year-on-year to 25.9 billion, despite a 3% decline in average monthly active player accounts in the same timeframe.
