Online gambling a haven for money launderers, report warns

Internet gambling is growing worldwide, and is increasingly becoming a haven for money launderers, according to a report released Thursday.
(Wayne Parry / Associated Press)

Just like it did to booksellers and travel agents, the Internet is rendering obsolete money launderers inside brick-and-mortar casinos.

According to a report released Thursday, the world’s criminals are increasingly laundering their ill-gotten gains on pseudo-legal gambling sites. Unlike their brick-and-mortar counterparts, the Web services allow criminals to hide their identities with cryptocurrencies such as Bitcoin, and muddy their whereabouts. Users, for example, can mask their true locations and make it seem to law enforcement that they’re located in another state or abroad.

“Like criminals during Prohibition, cyber thieves employing this method depend on anonymity, access, and the river of money that typically flows through an online gambling site,” warned the report from cyber security company McAfee.


And there’s speculation that illegal dealings on these sites could go beyond traditional money laundering. The FBI, for example, recently warned that online casinos could be used as a means for public corruption: “A criminal might intentionally lose a game to a public official in order to effect a bribe payment.”

In the United States, online gambling is legally murky. Last year, a subsidiary of a Las Vegas casino operator launched what it billed as the first fully legal poker website, but accepted bets only from gamblers in Nevada. New Jersey and Delaware have also legalized some gambling on the Web.

But in most of the country, wagering online has become more complicated since 2011, when the Department of Justice shut down the big offshore Internet poker sites catering to U.S. customers.

The legal pushback hasn’t stunted the industry, however. According to the McAfee report, each of the four major segments of online gambling (sports betting, poker, casino games and bingo) will continue to grow, representing a $43-billion industry by 2015, with an annual growth rate of 7.3%

Raj Samani, chief technology officer at McAfee, acknowledged that his team could not gauge how widespread the problem is, but said that the proliferation of unlicensed gambling sites have made online laundering easier.

“Law enforcement really has no purview of what’s happening,” he said. “A lot of the operators work outside of law enforcement jurisdiction. You’d be crazy to launder through a U.S.-operated casino. With the click of a button, you can be in any country around the world.”



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