14 DAY TRIAL // “Jackpot! Money Laundering Through Online Gambling” is the latest report published by McAfee, an Intel Security company. Authored by Raj Samani, Charles McFarland and François Paget, the whitepaper focuses on how cybercriminals launder their criminal proceeds through online gambling websites.
Experts highlight the fact that online gambling websites play an important role in money laundering.
“For example, the numbers of unlicensed sites are as many as nine times those of licensed operators. We are also witnessing many sites now operating on the Dark Web and leveraging virtual currencies,” Samani explained in a blog post.
“If we add to this an ecosystem that provides a multitude of tools to aid in obfuscating those laundered funds, there is no doubt that the challenge for law enforcement is significant.”
Cybercriminals rely on online gambling websites for several reasons: they allow transactions with Bitcoin and other virtual currencies, and they enable customers to remain anonymous. These are two main ingredients needed for an efficient money laundering operation.
While many gambling sites are in compliance with the law, as Samani highlighted, there are much more unlicensed websites. McAfee’s report shows that the number of unlicensed websites has reached around 25,000, new ones being launched on a daily basis. For comparison, there are only just over 2,700 licensed websites.
Gambling websites are appealing because a lot of money flows through them. This makes it easier to disguise illegal activities like money laundering. Another advantage is the fact that gambling doesn’t involve paper currency or other physical products, making it more difficult to track the flow of the money.
Furthermore, in many jurisdictions, gambling winnings are tax-free.
The report describes two scenarios. In one, cybercriminals launder the proceeds by betting it all and getting it back “clean” as gambling winnings.
“The ability to transfer small funds into ‘legal gambling wins’ is aided by the offshore nature of many services and vastly reduces the detection rate by law enforcement. The reduced detection rate lowers the cost of laundering as the number of potential fines decreases,” experts explained in their report.
The second scenario involves using gambling as a payment tool for illegal goods. For example, criminals can purchase various items with money from their gambling accounts by transferring funds into the account of the seller. The seller can then claim the funds as tax-free gambling winnings.
The complete “Jackpot! Money Laundering Through Online Gambling” is available on McAfee’s website.