Home Finance Crypto Laundering – a Headache for Casinos and a Blessing for Criminals

Crypto Laundering – a Headache for Casinos and a Blessing for Criminals

Crypto Laundering – a Headache for Casinos and a Blessing for Criminals
Photo by Dmitry Demidko on Unsplash

The innovations that have emerged over the past decade in the financial services industry have touched online casinos and players. If earlier exclusively fiat was offered on online gambling sites both for deposits and withdrawals, then everything changed with the arrival of Bitcoin and other cryptocurrencies. In the eyes of casino clients, this meant more variability, a faster payment speed, and, importantly, the anonymity of transactions. Now playing your favorite slots casino games, and other titles became even more fun as many online casinos began to offer bonuses for players’ crypto payments.

But the advantages of cryptocurrency quickly caught the eye of not particularly honest people who, of course, did not miss the chance to benefit from them in their unlawful purposes. Thus, crypto showed the other side of the coin – its advantages are often used in money laundering. Unfortunately, online casinos are often used as platforms where these processes can occur, but fortunately, they can use certain reaction mechanisms. More on this further on.

Modern Approaches to Combat Money Laundering

Today, the use of cryptocurrency essentially remains unregulated, and most countries worldwide are still at the stage of concern about the lack of control over the crypto market. China, however, took tougher steps in 2021 to ban mining and cryptocurrency transactions. The main reason for the cautious attitude of states towards cryptocurrencies is the high volatility of assets and their use as a tool for money laundering. Therefore, the bright forecasts of financiers and economists about crypto technologies as the nearest future were somewhat overshadowed. Obviously, it was required to introduce measures to prevent money laundering at the legislative level.

Such a set of regulations designed to prevent criminals from concealing illicit funds by presenting them as legitimate income is called Anti-Money Laundering or AML. Its purpose is to promptly identify and stop the flow of illegally earned money into the “clean” flow of funds.  

What Does Online Casino Have to Do With It?

Since the origin of money sent using a crypto wallet cannot be determined as it happens, say, with a bank account, criminals only need to find a place where they can turn these funds into laundered ones. Here they are passively helped by online casinos that allow crypto deposits. Scammers’ scheme is as follows: they use crypto to play and, after winning, request a withdrawal of funds and receive real money. 

Vigilant law enforcement agencies, however, quickly noticed the use of online casinos by scammers as a channel for money laundering. Therefore, online casinos are obliged to conduct due diligence on customers and report any suspicious transactions or customer actions. Of course, rarely will anyone act in the open, and fraudsters often gain patience to not deposit large amounts of money at once but break them up into small installments.

So how do online casinos have to deal with the actions of fraudsters on their sites? The KYC policy is used to implement the anti-money laundering policy. The well-known account verification before withdrawing funds, which players do not like so much, is, in fact, part of this policy. And it is used not to collect customer data for the personal purposes of the casino, as many think, but to prevent minors from gambling, prevent the abuse of no deposit bonuses for registration, and of course, present information about the player to law enforcement agencies if necessary.

What’s on the Bright Side?

Since the phenomenon of cryptocurrencies has arisen relatively recently, unlike any other money, regulators are in no hurry to give the go-ahead for the full recognition and widespread adoption of cryptocurrencies. This issue needs to be investigated as risks such as using crypto for money laundering are already becoming apparent. However, the idea that crypto funds are a tool only used by criminals should not catch on.

After all, this is a great way for ordinary players to deposit funds and withdraw winnings without commissions for third parties and gain access to gambling from countries where gambling has several restrictions. And, of course, the anonymity offered by the blockchain at the heart of cryptocurrencies is necessary not only for shady people but also for everyone who does not want their gambling history to become available, say, to banks. Therefore, choosing a crypto casino should be approached with caution.

Featured Photo by Dmitry Demidko on Unsplash