Money Laundering through Casinos – How to tackle it?

An issue that has been ignored for too long is fraudulent activity via the casino system. It has now become a recurring issue, as gambling giants like Entain recently received a fine of more than £17 million for violating anti-money laundering protocols. The failure 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 serve as a platform for modern slavery.

Money laundering is the illegal process of concealing the origins of money obtained from criminal activities. It is a severe crime, and yet, sadly, many casinos still fail to tackle it effectively. From a lack of proper regulations to inadequate tracking systems, this article will discuss why casinos still need to crack down on money laundering and how they can tackle it. We will also discuss the implications for businesses and what measures should be taken to prevent money laundering in the future.

Money laundering in Casinos

Global gambling-industry financial penalties amounted to approximately $128,913,840 in 2022, up 166% from $48,642,992 in 2021, according to USA-Casino.com. As of October 2022, the UK’s gambling regulator had charged 16 operators $48m (£45m).

Casinos have long been associated with money laundering due to the large amounts of cash that change daily. Despite this, casinos have failed to crack down on money laundering, and the problem seems to be getting worse. 

There are several reasons why casinos have failed to tackle money laundering. A few majors are 

  1. Lack of tracking of the fund source – because cash is often used. 
  2. Lack of AML policies. 
  3. Being located in countries with lax financial regulations makes it easy for criminals to launder money 
  4. Inadequately trained employees to spot money laundering signs and stop the same. 

So how can casinos crack down on money laundering?

  1. They need to put better policies and procedures in place to prevent it from happening in the first place. This includes proper customer due diligence, robust Know Your Customer (KYC) procedures, and more effective monitoring of transactions. As former US gambling regulator Richard Schuetz spoke with USA-Casino.com and said, “Given the inevitable increase of proliferation of online gambling in 2023, one can expect more regulations, and of course more casino and gambling industry fines”.
  2. Casinos need to do more to train their staff to spot the signs of money laundering. This training should cover what to look for when customers withdraw or deposit large amounts of cash and how to report suspicious activity.
  3. Casinos should consider using modern technology. 

The methods used by criminals

Though casinos have been put under increased pressure to stop money laundering, they continue to face many challenges. For one, criminals are constantly finding new ways to launder money, making it difficult for casinos to keep up. Moreover, many casinos still need to do more to crack down on, leaving themselves vulnerable to attack.

So what can casinos do to protect themselves from money launderers better? For starters, they need to be more proactive in identifying suspicious activity. This means being on the lookout for things like large cash deposits or withdrawals, frequent wire transfers, and patterns of betting that seem designed to evade detection.

Additionally, casinos need to ensure they have robust anti-money laundering policies and procedures. These should include KYC (know your customer) checks, reporting suspicious activity to authorities, training staff on the spot, and reporting red flags. By taking these steps, casinos can make it much harder for criminals to use them to launder money.

The Casino’s responsibility

In recent years, casinos have come under increased scrutiny for their role in money laundering. This is because casinos are often used to clean dirty money obtained through illegal activities.

Casinos have a responsibility to ensure that they are not being used to launder money. However, they have failed to crack down adequately on this activity. This is partly because casinos are often reluctant to report suspicious behavior to the authorities for fear of losing customers or damaging their reputation.

There are steps that casinos can take to tackle money launderings, such as better training for staff, improved customer due diligence, and more substantial reporting procedures. However, more must be done to prevent casinos from being used to clean dirty money.

The challenges of combating Casino’s money laundering

Although casinos are some of the most heavily regulated businesses worldwide, they are still struggling to combat money laundering effectively. The challenges are numerous and include both institutional and operational challenges.

Institutional challenges include that many casinos are owned by large, publicly-traded companies, making it difficult to implement adequate anti-money laundering policies. These companies are often reluctant to invest in compliance because it is not revenue-generating and can be seen as a cost center. In addition, there is often a lack of coordination between regulatory agencies, making it challenging to develop a cohesive strategy for combating money laundering.

Operational challenges include that casinos deal with large amounts of cash daily, making it easy for criminals to launder money through them. In addition, many casino customers are international visitors who may be using illicit funds to gamble. This makes it difficult for casinos to vet their customers and identify suspicious activity correctly.

Despite these challenges, there are some things that casinos can do to combat money laundering better. These include increasing transparency around ownership structures, investing in compliance functions, and developing better customer due diligence processes.

Solutions to tackle money laundering in Casinos

Money laundering is a serious problem for casinos. Casinos must implement better policies and procedures to crack down the same. Here are some solutions to tackle:

  1. Improve Know Your Customer (KYC) Procedures

Casinos need to improve their Know Your Customer (KYC) procedures. KYC is the process of identifying and verifying the identity of customers. This is important because it helps casinos ensure they are not doing business with criminals or terrorists.

  1. Implement Better Record-Keeping Practices

Casinos need to implement better record-keeping practices. This means keeping track of all transactions, both incoming and outgoing. This will help identify any suspicious activity.

  1. Use Technology 

Various technologies can be used to help combat money laundering. For example, casinos can use software that flags suspicious activity. They can also use data analytics to identify patterns of behavior that may be associated.

  1. Cooperate with Law Enforcement Agencies

Casinos should cooperate with law enforcement agencies in order to crack down on. This includes sharing information about suspicious activity with the authorities.

Conclusion

Money laundering is a serious problem for casinos and other gambling establishments, as it has the potential to lead to criminal activities. However, by investing in stronger AML systems and tightening their compliance regulations, casinos can reduce their chances of getting involved in such frauds. Additionally, they should also train staff on identifying suspicious activity and take steps toward improving customer verification processes. By accepting these necessary measures, casinos can protect themselves from being used as vehicles for money launderers while allowing customers peace of mind that all transactions are carried out legitimately.

A more proactive approach can detect and prevent money laundering. This can be done through improved customer due diligence practices and enhanced internal processes such as reporting suspicious activity immediately. With increased vigilance, casinos can ensure they remain compliant with regulations while reducing the threat of criminals using their services for illegal activities.

The latest AML onboarding solutions can help casinos prevent their operations from becoming dirty money laundering channels by tackling common AML malpractice. Technology can be the winning jackpot to clean up casino operations.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
You can reach out to our team at reachout@signzy.com

Written By:

Shraddha is a passionate Digital Marketer and a versatile leader, working as the Director of Marketing at Signzy. She is a goal-driven professional with excellent innovative skills. Having 11+ years of experience across industries including travel, SNV, healthcare, and Fintech, Shraddha considers herself a self-empowered and self-driven individual ready to take on challenges and proactively rise to occasions in crisis. A professional who ardently believes in the right work-life balance, she ensures to spend quality time with her family. This has a positive effect on her professional life and pursuits.

Automated KYB- Relevance & Normalization

The anti-money laundering software market is projected to reach $1.77 billion by 2023. This means that banks and financial institutions are improving their processes like KYC, KYB, and AML. But we need a closer look at why this is happening, its relevance, and how we can normalize active automation.

Banks and other financial institutions have long been the central focus of all commercial activity. They must carry out due diligence at each stage of the client journey, which is a huge duty. A compromise in that financial system might have financial and security repercussions worldwide in today’s digital age.

Ironically, the least concerning possible problems are fraud and money laundering. As a result, banks may unknowingly assist in funding international terrorism, illegal drug use, and human trafficking. Banks can help KYCC by using increased due diligence techniques in the KYB and KYC verification process to reduce the possibility of onboarding non-compliant organizations.

 

KYB- A Deeper Look And Better Solution

The financial sector is aware of the conflict it is facing. Banks and other financial institutions realized the value of KYB and AML/KYC compliance after being the target of ongoing cyberattacks, scandals, embezzlement, and fraud schemes. Many Small and Medium-Sized Businesses (SMBs) don’t, though. Even some huge organizations disregard AML/KYC compliance due to the expense of onboarding new customers.

Banks are ultimately at risk due to assumptions made by other industries. For example, one company made a hiring decision based only on intuition, believing the position to be entry-level and exempt from intrusive background investigations. HR promoted this employee to a crucial decision-making position a few years later, assuming the background check was completed earlier.

 

Why KYB Should Be Genuine And Effective

Everyone inside and outside the financial industry must contribute to AML/KYC compliance to protect the sector. Companies should not just seek digital KYC verification to avoid fines for non-compliance. Instead, all businesses, from SMEs to major multinationals, should feel compelled by moral and ethical principles to investing in rigorous KYB and KYC verification services.

The secret to stopping fraud and boosting global security is making sure the people you bring on board are reliable. That is why it is crucial for financial institutions to implement an efficient KYB and KYC verification process.

Before beginning a commercial connection, B2B customers and their clients must undergo worldwide ID verification and behavior monitoring as part of the KYB verification process to assess their risk and sustainability.

Businesses and banks make sure that transactions are consistent with their risk profile by doing regular behavior monitoring. In addition, employee records and other important information are maintained secure and current with the help of effective digital identity management.

Knowing a company’s high-risk clients and business partners helps to protect your company’s reputation from being accused of criminal carelessness for facilitating the movement of illegal monies.

 

How to Make Automated KYB and KYC Verification the Norm in Your Business? 

To achieve AML/KYC compliance, developing your KYB and KYC verification procedure is an excellent place to start. Transparency in financial activities can be ensured by adhering to local, regional, and international AML/CFT laws and regulations, including those of the European Union (EU), the United Kingdom (UK), the United States, and others. Concerning ongoing client screening and risk assessment, having quick access to the pertinent worldwide watch lists, spam lists, and sanction lists are helpful.

As previously mentioned, verification for commercial entities can be time-consuming, and even ID card verification is more complex with the proper global ID verification system.

Databases

Your digital KYC verification system must have access to the appropriate databases to swiftly validate IDs and documents, checking watchlists, and evaluate the risk to guarantee that you comply with AML/KYC regulations. Most identity verification service providers can validate customers’ IDs; they do not offer tools for behavior monitoring or document verification services.

Digital Identity Management And Relevant Laws

Data collecting and digital identity management are disadvantages of the DIY method for building your own digital KYC verification system. Businesses occasionally need to remember that there are rules for data handling in addition to using client information to inform customers of impending changes and events. In addition, consumers can maintain control over their data thanks to the Global Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).

Act on Protection of Personal Information (APPI), which will have the same extensive effects for third-party data suppliers outside of Japan as the GDPR, has now been implemented as Japan’s equivalent of the GDPR. In cross-border ID verification, these data requirements and digital identity management should be included in the cost of customer onboarding. In addition, providers of identity verification services must also accommodate mobile ID verification.

Identity Verification With KYC And KYC

Combining their current customer onboarding procedure with mobile ID verification is the one grey area where banks and other financial institutions struggle. However, artificial intelligence-powered automated customer onboarding systems may be of assistance.

Providing an automated KYC verification method that detects fraudulent information faster than humans could help close the gap between banks and businesses. In addition, KYB and KYCC should be carried out in unison and with perfect online ID verification as part of B2B customer onboarding.

 

Bottomline

KYB adoption is no longer the issue. Enterprises are looking forward to automation and its normalization for improved identity verification. You can avail of effective solutions for automation at www.signzy.com.

 

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

 

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.