The UK Gambling Commission has recently underscored a host of new challenges that gaming operators will need to navigate this month, highlighting rising risks associated with money laundering and terrorist financing. These threats range from the misuse of AI deepfake technology to the allure of cryptocurrency crash games.
Under the stipulations of UK licensing agreements, operators are mandated to remain vigilant about emerging threats, as failure to do so could result in financial penalties or the revocation of their licenses.
Recently, the Commission imposed sanctions on two companies for insufficient anti-money laundering (AML) measures and inadequate customer service. The Football Pools was fined £375,000 (approximately €449,732/$484,417) for AML violations, while Corbett Bookmakers faced a penalty of £686,070 due to several AML shortcomings.
In a guidance update released on April 8, the UK regulator expressed concern regarding certain remote and non-remote casinos that have been found to be offering unlicensed money service business (MSB) activities, such as foreign currency exchanges and third-party cheque cashing. Furthermore, there have been instances where customers attempted to deposit substantial sums in foreign currency, including €500 notes.
The Commission stated, “Transactions involving high-denomination currency carry significant money laundering risks, particularly requests to exchange €500 or other high-value notes, which should be regarded with caution.”
Additionally, disturbing reports have emerged about individuals being incentivized to sell their personal information, allowing criminals to set up multiple accounts within licensed gambling platforms. The Commission expressed its concerns over the creation of illegitimate mule accounts through purchased personal details, a practice that may be facilitating unlicensed betting schemes.
### AI and Cryptocurrency: New Frontiers in Money Laundering Risks
With advancements in technology, artificial intelligence has become a sophisticated tool that criminals are leveraging to circumvent standard due diligence processes. The Commission has noted that there are individuals using AI-generated fake documents, deepfake visuals, and manipulated media to assist in laundering activities.
To counter this threat, the Commission advocates for operator staff training focused on identifying AI-fabricated documents. Furthermore, transactions involving crypto assets and cryptocurrencies are to be treated as heightened risks for money laundering, urging licensed operators to be aware of reported cryptocurrency thefts that could be laundered through their platforms.
Moreover, the regulator has called attention to the rise of crash games in illicit crypto casinos and their increasing acceptance among licensed gaming operators due to their popularity. The Commission cautioned, “Such products can enable criminals to obscure rapid cashing out behaviors that raise red flags, particularly given the limited gameplay associated with crash games, complicating the ability of transactional monitoring systems to identify suspicious behaviors.”
Hence, operators are encouraged to establish robust protocols capable of spotting dubious wagering patterns specifically in crash games.
### Concerns About Black Market Suppliers
The Gambling Commission has also noted a troubling trend wherein gaming titles from licensed operators are appearing on unregulated websites within the UK market. The Commission has reiterated its advice for license holders to thoroughly vet their supplier partnerships, insisting that any connections to illegal sites must be severed immediately should they be discovered.
“It is crucial for licensees to engage proactively with the Commission if they uncover such activities, sharing details on the measures taken to prevent further issues,” the Commission has stressed.
The regulator has made this point clear in multiple public engagements over recent months. In a January webinar, Commission CEO Andrew Rhodes cautioned operators against the risks associated with alliances to black market suppliers. He emphasized, “It baffles me that any entity in the licensed gaming sector would seek business relationships with operators enabling illegal competition.”
The Commission insists that casino operators must undertake comprehensive assessments of money laundering and terrorist financing risks. Furthermore, they must implement rigorous controls while regularly reviewing their effectiveness. Customers utilizing MSB services must be regarded as high risk and subjected to heightened due diligence protocols.
Land-based operators have also been guided to adopt closed-loop payment systems instead of open-loop ones, as the latter has been identified as a significant money laundering risk due to its capability of facilitating money movement across diverse payment methods.