MONEY LAUNDERING
Lazarus Group of hackers to steal US$1 billion from the Bank of Bangladesh. Despite the heist being a digital one, the audacious scale of the sums involved was enough to mobilise law enforcement authorities around the world. This meant that, not only was most of the money recovered, but the methods used try to launder it were also revealed. One of these was the infamous episode in the Manila Solaire and Midas casinos where US$50 million was deposited. Men sat and played at the tables for weeks betting against each other before exchanging their chips for cash making it practically impossible for investigators to trace. White investigated a similar North Korean attack on Malta’s Bank of Valetta in February 2019. That investigation yielded the only evidence of stolen money being laundered through online sports betting company, Tipico. Conversations between the launderers emerged in an FBI report showing that EUR500,000 of the stolen money had been moved through the company. Although there is no suggestion that Tipico was knowingly involved, they were still used to launder money. One of two possibilities seems likely: either the criminals had an accomplice within Tipico or they used a fake ID to set up an account there. In a more recent case reported in The Times , a financier known as Opel confessed to having been involved the laundering of £200 million for the notorious Kinahan family crime cartel. He recounts using “investments in art, wine, crypto, whisky and stocks around the world’. He mentions numerous “offshore accounts, trust funds, companies and investment schemes” and “trading platforms in tax havens”. Opel says: “How do billionaires that demand discretion make shrewd investments? They diversify splitting their investments by purchasing wine, fine art and cryptocurrencies.” The money “had to pass all the know-your-customer (KYC) and anti-money laundering (AML) requirements, which were very thorough. But once this was achieved, it would be impenetrable to law enforcement and could be maintained for generations.” 19 At no point in the interview does Opel mention using online gambing to launder his client’s cash. Whilst the reported instances of traditional money laundering through online gambling are rare, the fact that it can happen and that enterprising criminals will try to exploit
any weaknesses indicates that the SNRA is right to raise the possibility. Asking operators to take a risk-based approach, however, is hard without evidence of actual sums being funnelled through online gambling platforms. Beyond the world of organized crime, there are numerous examples of individuals using money that they have stolen from their employers, from charities or family and friends to feed a gambling habit. As already noted, these are not people interested in laundering money and certainly cannot have been on the minds of the European Commission in its SNRA who are most worried about “the use of anonymous e-money and virtual currencies and the emergence of unauthorised online gambling operators”. 20 The EGBA also identifies “categories of customers whose activities may indicate a higher risk include PEPs, high risk occupations, high spenders, disproportionate spenders, etc.” 21 Does AML prevent money laundering? Given the amount of effort being expended by online gambling operators on AML compliance, it is reasonble to ask whether or not it is making a difference. The answer very much depends on the kinds of money laundering we are talking about. Whilst criminal gangs may target online gambling, there is no overwhelming evidence or logic that they will. The Moneyval assessment from 2013 remains valid today: identity and traceability are the keys and if there are strong checks on customers and source of funds then the EGBA should be correct that risk can be mitigated to an acceptable level. Jurisdictions with weak AML regulations, weak enforcement of regulations or high levels of corruption will always be attractive to money launderers. Some have suggested that organized crime gangs may create entire fake online gambling companies as a front to launder money. This may indeed be the case but no AML checks by legitimate operators will prevent such an activity. The SNRA is right to focus on the tightening up of systems and education of staff but there is very little a regulator can do to prevent an employee of an online gambling company who is being threatened by launderers from colluding with them. As other methods of money laundering become more difficult, the
19 https://www.thetimes.co.uk/article/kinahan-gang-drug-cartel-launder-200-irish-organised-crime-2023-ws0699ggt 20 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022DC0554 21 EGBA Guidelines on AML for Online Gambling 2023
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IMGL MAGAZINE | APRIL 2023
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