6 Common Сasino Money Laundering Techniques: Cautionary Overview

29 December, 2023 Gaming

Online gaming sites can be a honey source for money laundering. And if casino operators slip up the chance to detect such attempts or simply lack the appropriate measures, they can have their license revoked and even face penalties.

One such illustrative example is the trendiest scandal of The Star Entertainment Group in 2022. According to Sarah Court, ASIC Deputy Chair, Star’s board and executives failed to prevent money laundering at its Sydney Casino. If in a few words, the Star Entertainment Group allowed 1,222 users to gamble over $617.6 million via high-risk payment channels. As a result, the company’s NSW license was suspended, and it was fined $62 million dollars. And similar cases are more than enough in the iGaming space.

Actually, gaming operators have much remaining on their plates that need to be done when it comes to fighting against money laundering. The most crucial thing they can do is to implement an efficient CDD (Customer Due Diligence) check and follow AML processes.

However, even these can sometimes not be enough to confront powerful hacking attacks and malicious acts. Gambling organizations first need to learn how to identify suspicious behavior and what the most common laundering schemes are to minimize the risk.

In this article, we will shed light on the 6 most used types of money laundering techniques hackers practice in online casinos. So, get comfortable and let's begin.

What Are the Most Widespread Money Laundering Schemes in Online Gaming — Top 6

When it comes to money laundering, it can take up different shapes at both KYC and withdrawal without verification casinos. Here, we have highlighted the most common ones.

#1 Cash-in, Cash-out

Probably, this is the most typical and the simplest money laundering scheme in the gambling sector. The essence of this method is as follows: a malicious actor just exchanges dirty money with casino chips in physical gambling venues or electronic money in online casinos. Then, these chips or electronic funds are used to play various casino games before the scammer cashes them out as clean money in the form of a check (in physical casinos) or online winnings (in online casinos).

As a result, dirty funds can be mistaken for money earned at a gambling site. Normally, fixed-odds betting terminals are used in this method since they let the player only lose a small amount when cashing out.

One such example is the case in 2006 when a lawyer from Virginia used this cash-in, cash-out approach to launder $250,000 at the Taj Mahal Casino in Atlantic City. To make it possible, he first transferred $250,000 embezzled money into a betting account, then purchased a casino marker with $10,000, lost $1,000, and cashed out the remaining funds.

#2 The Vancouver Model

If we go back to the time period between 2008 and 2018, we can see that gambling establishments in Vancouver were massively used to launder money in large sums from China. The reason for this was the restriction imposed on Chinese citizens, according to which they were prohibited from bringing more than $50,000 out of the country. That's when criminals in Vancouver thought of a workaround and offered it to local players.

The scheme required people to wire funds to the Chinese banking account of a Vancouver-based crime gang. Upon their arrival in Vancouver, they could get cash in exchange.

In the next step, they just needed to take this cash to a casino in Vancouver, place several small bets, and then cash it out as casino winnings. As a result, it will be cleaned of its illegal source.

#3 Collusion Between Gamers

Another money laundering strategy is the Collusion Between Players. If in simple words, it requires one gamer to intentionally “lose” their dirty money, which was exchanged for physical casino chips or electronic money beforehand, to an accomplice gamer at online or brick-and-mortar casinos, for example, in a poker game. This way, the money is no longer related to its criminal roots and can easily be withdrawn as “clean” funds.

The “advantage” of this method is that it gives launderers a chance to escape any AML detection policies, as currently, they can only be triggered by successful bets against the gambling platform itself and not other gamers.

#4 Exchanging Goods Through Gambling

This method allows a gamer to clean their funds at the same time as they receive illegal money and sell illegal goods. Simply put, both the seller of illegal goods (like weapons or drugs) and the buyer takes part in the same casino game. This way, the buyer can easily send funds to the seller through the bet or game using the player-to-player transfer option. Then, the seller cashes out the money from their payment account in exchange for goods. It is quite efficient if we look from the criminal perspective.

Technically, as funds come via gambling, they can't simply be traced as an illicit transaction.

#5 Purchasing Chips from Someone Else

The next common method of money laundering is when people try to clean their funds by buying casino chips or the winnings of other players at a higher price. For instance, the launderers can approach jackpot winners at a poker game venue and offer them cash at a premium in exchange for their winning cheques.

In some cases, these malicious actors can even pay off the gambling debts of the gamer in return for getting payments in the form of chips later.

#6 Mixing Non-Gambling and Gambling Methods

More professional criminal groups are practicing various ways to further conceal traces of funds laundered through gambling sites. They typically involve virtual assets like NFTs, cryptos or even property purchases to achieve their goal.

Simply put, criminals use their dirty money to place small bets at online casinos, which will help them clean their money and then use these funds to buy various properties. Later, they sell these properties and cash out money.

Through this method, criminal groups try to confuse authorities by masking the origin of the money.

Key Vulnerabilities in Online Casinos

Both land-based and online gambling venues are often abused by criminals to launder money. The cause of such frequent hacks lies in the security vulnerabilities that most online casino platforms come with.
Overall, according to FATF (The Financial Action Task Force), there are multiple potential vulnerabilities that gambling operators might have that result in money laundering. These cover:

  1. Transferring funds between customers;
  2. Cash payments;
  3. Deposit accounts;
  4. Third parties;
  5. Multiple accounts;
  6. Identity fraud;
  7. Receiving crime proceeds;
  8. Multiple operators.

Even though these are not the only “faulty elements” that lead to illegal activities, they are still the key ones.

In order to prevent or minimize the risk of money laundering cases, gambling operators should implement some precautionary measures. The most common ones cover:

  1. Utilizing customer due diligence procedures (gathering personal data, verifying the source of money, etc.);
  2. Integrating KYC procedures;
  3. Reporting suspicious transfers;
  4. Organizing employee training from time to time, etc.

And don't forget about the most effective method, which requires compliance with AML regulations.


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