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Prof. Michael Levi, Professor of Criminology at Cardiff University has written a report on his conclusions following a study of money laundering and its implications for the online gambling industry.
The professor observes that while it's not a realistic policy goal for governments in a free society to eliminate money laundering risks altogether, there are ways to reduce them to a tolerable level.
He suggests that regulation is one of these, ensuring operators undergo a 'fit and proper person' test before receiving a licence, and preventing people with links to organised crime and terrorist groups from owning what could be vehicles for laundering.
Regulatory strategies have additionally encouraged online gaming companies to develop a set of procedures to reduce integrity risks.
Professor Levi argues that in a regulated sector, the risks and amounts associated with online gaming are modest in comparison to other sectors. This is due to the high traceability and transparency of online gaming transactions, as well as the customer identification controls that make money laundering unattractive.
Online gaming companies licensed and regulated in the EU have chosen to comply with the Third EU Directive for the prevention of money-laundering and, in addition, apply complementary codes of conduct.
"A review of recent literature shows that online gaming does not significantly feature directly in the recent published threat assessments of Europol and other European policing organisations, or in their policing priorities," the Professor notes. "To date, generalised and understandable expressions of concerns by Europol and by the Financial Action Task Force about money laundering risks posed by the Internet have not been accompanied by evidence of significant laundering via online gaming."
Potential areas of risk are mitigated by the deployment of a suite of tools by regulated online gaming companies. These tools may vary over time in order to combat any risks in a proportionate manner. However, the report concludes that there is scope for improvement in controls over fraud and laundering. Regulators need to be vigilant:
(i) about the levels of private sector resourcing of anti-fraud/anti money laundering (AML) efforts, without which risks would rise; and
(ii) achieve consistency between themselves in terms of AML requirements.
Professor Levi lists the risks and responses around money laundering in the online gambling milieu as follows:
Source: InfoPowa News