Key Insights
- Online gambling platforms and alternative payment methods create emerging money-laundering risks across international borders.
- Gambling-related risks can reach CFIs through ordinary customer payment activities, including P2P, cards, wires, and ACH.
- Adopting FATF risk indicators helps institutions enhance BSA/AML monitoring to detect suspicious or mismatched funds flows.
Before an internet search could settle a geography question, catching a computer-game criminal sometimes required cracking open an almanac. Released in 1985, Where in the World Is Carmen Sandiego? sent players around the globe pursuing thieves who had stolen famous treasures. Witnesses offered clues to the suspects’ identities and destinations, while the accompanying World Almanac and Book of Facts helped players piece together the trail. Catching the culprit meant connecting scattered clues across international borders.
Today, following the money through online gambling platforms can require some international detective work of its own. For community financial institutions (CFIs), a customer’s payment to a betting site may reveal only part of the story; the sources, routes and amounts of money coming back can be just as important. A recent Financial Action Task Force (FATF) alert highlights the money-laundering risks associated with gambling, giving CFIs a timely reason to review whether their BSA/AML procedures can connect the clues.
What FATF’s Alert Says
The intergovernmental standard-setting organization analyzed the various money laundering risks associated with online and land-based gambling, sports betting, payment channels and potentially illicit operators from across more than 80 jurisdictions globally.
“Findings indicate that certain payment methods associated with gaming and gambling activity, such as cash, e-wallets, mobile money and virtual assets are vulnerable to a range of money laundering risks,” the FATF writes. “The variety of payment methods accepted by online gaming and gambling operators increasingly allows rapid, anonymous, cross-border transactions, and the conversion of value into different forms.”
Why Online Gambling Risk Should Matter to CFIs
Even if a CFI does not serve gambling businesses directly, gambling-related risk can enter through customers’ everyday account and payment activity. A customer may send money to a gambling operator or receive funds through a payment intermediary, leaving the institution with only a partial view of the underlying activity.
The issue is not that lawful gambling is inherently suspicious. Rather, CFIs should recognize when a customer’s transaction behavior, payment pathways, and source-of-funds profile together suggest a possible money-laundering, fraud, or other financial-crime risk. That assessment should focus on the activity visible to the institution, while recognizing that customers may also move funds through other banks, payment services, or gambling accounts.
Online Gambling Risk Indicators
The FATF lists red-flag risk indicators involving gambling platforms, customer behavior, betting patterns, payment methods, and transactions. Some require information held by gambling operators, such as betting histories or details about individual gambling accounts. CFIs generally cannot see those details through a customer’s banking relationship, but they can examine the account and payment activity available to them.
“I think banks need to see their role as recognizing money going out,” says Emily Griffin, director of the financial crime compliance practice at Moody’s, “and then how it’s coming back in as well.”
For CFIs, the focus should be on observable activity. Where available transaction details identify a gambling-related counterparty, patterns worth examining include:
- Gambling-related activity inconsistent with the customer’s profile. Payments to or receipts from identifiable gambling operators that appear out of line with the customer’s known income, stated source of funds, or historical account activity may warrant review.
- Unusual third-party funding. Frequent incoming transfers from numerous individuals, followed by payments to an identifiable gambling operator, may warrant questions about the source and purpose of the funds. The CFI can review transfers through its own accounts but may not be able to determine who ultimately funds or controls the gambling account.
- Rapid onward movement of funds. Receipts from an identifiable gambling operator followed quickly by transfers to multiple accounts or beneficiaries may warrant examination, particularly when the pattern differs from the customer’s usual activity.
- Gambling-related receipts that repeatedly exceed visible payments. A customer who sends relatively small amounts to a gambling operator but repeatedly receives much larger sums back may merit closer review. The difference does not establish wrongdoing, but it can raise questions about funding sources outside the CFI’s view.
These patterns are prompts for further examination, not proof of money laundering. CFIs should assess the surrounding circumstances and recognize the limits of their visibility. A payment involving a P2P service or e-wallet does not, by itself, establish that the funds went to or came from a gambling platform.
How CFIs Can Assess and Respond
CFIs can use these indicators to evaluate whether their existing BSA/AML processes adequately address the gambling-related activity visible through their banking relationships.
- Assess your exposure. Review relevant payment flows, customer segments, available merchant and counterparty information, geographic exposure, and suspicious-activity history. Include relationships with payment intermediaries or gambling-related businesses, where applicable. Identify both the information your institution can use and any gaps that may complicate investigations.
- Strengthen monitoring and investigation procedures. Review whether existing transaction-monitoring scenarios and investigation procedures capture meaningful combinations of indicators, such as unusual third-party funding followed by gambling-related payments. Adjust monitoring, escalation, and SAR decision-making procedures where the assessment identifies gaps. Coordinate this work across BSA/AML, fraud, payments, operations, digital banking, and frontline teams.
- Apply a risk-based approach. Evaluate potentially concerning patterns in the context of the customer’s profile and expected account activity. Consider transaction amounts, frequency, speed of movement, sources of funds, and available counterparty information together rather than treating a gambling-related payment as suspicious on its own. Document the assessment and follow the institution’s established investigation and reporting procedures.
CFIs do not need a complete view of a customer’s gambling activity to assess the transactions moving through their own accounts. The priority is to connect those transactions with the customer’s profile, expected activity, and available counterparty information, then determine whether the combined picture warrants further investigation.
