FINTRAC Warns of Online Gambling Platforms Being Utilized for Money Laundering

Canada’s financial intelligence unit warns that illicit cash is being laundered through online gambling sites that provide a variety of ways for criminals to disguise illegal assets. 

In a bulletin recently published by the Canadian Financial Transactions and Reports Analysis Center, the organization drew attention to the criminal exploitation of licensed and unlicensed digital betting operations. 

FINTRAC is Canada’s national financial intelligence unit and is responsible for combating money laundering and terrorist financing by analyzing financial transactions while disseminating financial intelligence units to enforce anti-money laundering regulations nationwide. This regulatory authority has primarily kept the online gambling sector in check, which grew significantly with the 2021 legalization of single-event sports betting in Canada.

FINTRAC unmasks illicit funds effectively by verifying millions of pieces of information each year from banks, money-service businesses, casinos, insurance companies, securities dealers, real estate brokers, and others. The proceedings are then reported to other governmental regulatory bodies, which carry out operations to neutralize these activities. 

The latest bulletin features a comprehensive analysis of financial crime data from 2016 to 2023. The report includes an overview of illegal transactions and asset accumulations. To ensure a thorough examination, the data used was not just from Fintrac’s database but was also collected and analyzed by other regulatory bodies.

FINCEN stated, “Online gambling sites offer prospective money launderers opportunities to conceal the source of their funds by using multiple different deposit and withdrawal methods.” 

As per the report, the most frequently used method was purchasing prepaid cards or vouchers with suspected illicit funds, which were subsequently utilized to deposit money into gambling accounts. The funds were then withdrawn through wire or e-transfer to a Canadian bank account, disguised as winnings. However, for this purpose, cybercriminals had to create multiple shell accounts to avoid detection. The authority monitored these unlicensed transactions just below the reporting cap and identified a significant chunk of these criminal proceedings. A few criminal organizations were also laundering money by creating shell gambling sites.

“Other accounts appeared to exist mainly to facilitate money laundering through online gambling activity,” the bulletin says. “This included transactional activity that appeared circular where funds were received and sent back to the same gambling sites multiple times.”

Fintrac’s analysis helped agencies identify indicators of money laundering through online gambling. It also urged institutions to monitor accounts exclusively used for online gambling.