Many of us have seen Ozark - where dirty money is directly cleaned through a casino - but just how much of this is based on truth? Historically casinos have been a target for money launderers. They are exposed to significant money laundering risks, including quick or high turnover of cash with minimal betting. Gaming accounts can also be used to store illicit money outside the banking system. Plus, with the growth of the Metaverse and the risks associated with this, companies need to be on high alert. 

To counter this, the Gambling Commision in the UK promises to “ensure adequate controls are in place to prevent casinos in this country being used for money laundering or terrorist funding.” However, it also recognises that its risk-based approach is not a zero-failure regime. Although it raises awareness around the risks for gambling operators, financial criminals are still seeping through the cracks. 

With gambling giants like Entain recently being fined over £17 million for violating AML protocol,  fraudulent activity via the casino system is a recurring issue that has been ignored for too long. The failings of these big gambling players to clamp down against money laundering not only contributes to the proliferation of criminal activity such as human trafficking and illicit arms dealings, but it also highlights how casinos now act as a platform for modern slavery. 

That’s why we need to adopt new remedies that offer holistic action to ensure gambling institutions are not letting illicit funds filter through the system. The UK Gambling Commission needs to take their AML approach further than the bare minimum suggested by the FATF recommendations. Those basic guidelines assume motivation and ability to closely monitor customers and transactions are enough to help casinos navigate the complex world of money laundering. 

The risks and a crowning example 

Why is it that casinos are at high money laundering / terrorist financing  (ML/TR) risk and are required to operate as a designated service? 

Cash. It’s of course used extensively within casinos, transferred in and out and is highly opaque. Long and complex transactions occur involving different channels and jurisdictions. These complex transaction chains mean that money can be moved through layers utilising casino instruments such as chips and tickets, multiple electronic games and gaming accounts.

For example, when it came to Crown Casino in Australia, a lack of compliance in line with the AML/CTF Act 2006 led to a cocktail of high risk customers and a low risk approach that exploited these areas. There was a huge hole in protocols on ongoing customer due diligence (OCDD) to ensure up-to-date data on customers and transaction monitoring. This was joined with a failure to meet the demands that information collected and verified was able to ascertain whether customers are who they claim to be. 

The Crown’s failures enabled money to move in an opaque manner, making them openly vulnerable to criminal exploitation. One of the consequences included The Crown Resorts allegedly allowing $69 billion to be laundered through their resorts over a five-year period by 60 high profile customers. 

There’s a lot the UK can learn from this case. As seen here, commercial interest often outweighs compliance requirements when it comes to high net worth individuals. Criminals are looking for novel ways to clean their money and remove it from risky markets. The increase in these new methods demonstrates why AML technology needs to be integrated both early and quickly into the casino life cycle and emphasises that policy guidelines alone are not enough in catching financial criminals. 

Securing casino AML practice with technology 

So for casinos, what’s the next step to making sure AML guidelines and policy can actually be implemented across the board? 

One of the main reasons why money laundering is allowed to flourish in such environments, as excruciatingly expressed by the Crown example, is poor document collection for individuals and companies. Often these documents can be sporadically stored in a variety of locations, such as email attachments and download folders. This allows high risk personnel of interest to avoid detection. 

Modern AML technology platforms and onboarding solutions can provide a central hub of data accessible across the casino. By adopting a centralised and highly secure database, employees can quickly attain complete access to electronic versions of documents used for customer identification and risk assessments. But the latest tech is able to go much further than this. 

With just one click, companies can request a Customer Due Diligence / Know Your Customer case. This process can trigger a team of analysts to carry out these initial stages of identifying customers, checking “they are who they say they are” and analyse a variety of components such as entity structures and source of wealth. It becomes immediately harder to facilitate criminal activity or to ignore protocols. 

But also key to securing AML practice with technology is addressing employee awareness of AML requirements. From frequent training to highlighting red flag behaviour, encouraging a culture of compliance and awareness of anti-money laundering procedures within casinos is another crucial buffer to minimise exposure to money laundering activity.

Winning jackpot: Going beyond the bare minimum 

Ozark may be fiction, but its portrayal of money laundering in casinos hits on more than a hint of reality. The rapid, varied and layered structure of high cash turnover makes casinos the perfect sanctuaries for criminal behaviour. Basic guidelines set out by commissions can be overridden by a variety of factors and only offer a base level of protocol and control, as recently exposed by the Crown Resorts example. 

It’s a complex world, and it requires a simple system to be able to navigate it. One of the reasons casino-wide compliance can’t be administered is because there isn’t a unified approach, the awareness and the tools to allow employees to verify customers and the money that’s flowing in. 

But by leveraging the latest AML onboarding solutions, casinos can crack down on common AML malpractice and avoid being used as channels for cleaning dirty money. There’s no need to gamble with money laundering - technology can be the winning jackpot to clean casino operations.