Preventing Money Laundering with Effective Government Gaming Regulation

Following the legalization of online gambling in numerous states and provinces across North America, government gaming control experts are now confronted with the considerable challenge of effectively regulating this complex and rapidly evolving industry. A central focus in these efforts is the compliance infrastructure required to ensure licensed online operators are complying with current Anti-Money Laundering (AML) legislation, specifically the Anti-Money Laundering Act of 2020 (AMLA) and the Anti-Money Laundering and Anti-Terrorist Financing Regime.

Under this legislation online gambling operators are expected to meet the same requirements expected of financial institutions to prevent money laundering, cybercrime, fraud, and corruption. Within this compliance framework, operators are expected to maintain strong policies, processes, and technology to monitor both customer and internal employee activity to detect and prevent potential money laundering and/or terrorist financing. Such oversight can extend to expected compliance with international regulations such as Moneyval, the Financial Action Task Force (FATF), and European Union Directives, and is fortified by whistleblowing provisions to ensure financial crime investigations of complaints filed both internally and externally.


An Inviting Target for Potential Money Launderers


Today’s online gambling enterprises face several potential money laundering vulnerabilities specific to their unique business model:

  • The possibility for rapid, cross-border transactions.
  • The relatively anonymous nature of online gambling.
  • Transaction traceability impediments (tracing transactions and linking them to specific individuals can prove problematic).
  • The relatively low number of investigations and prosecutions of money laundering cases.
  • Usage of multiple accounts.
  • Usage of money service businesses.
  • Usage of master accounts.
  • Usage of V.I.P. accounts.
  • Influence of gambling syndicates.

Due to the intrinsic nature of these vulnerabilities, the potential for money laundering online increases exponentially, placing a greater emphasis than ever on monitoring gambling licensees to ensure operational policies and procedures can overcoming the vast potential for fraud that exists within the instantaneous transaction models of today’s online casinos, sportsbooks, and poker rooms.   

Tell Tales Signs That AML Procedures Are Lacking


As Gaming Control Agencies becoming increasingly familiar with the various vulnerabilities that potential money launderers can exploit within online gambling systems, tell-tale signs can emerge in those areas where online gambling operators are failing to facilitate anti-money laundering precautions with the necessary immediacy and due diligence. By focusing on this relatively small list of operational red flags (below), savvy gaming regulators can have a massive impact on their agency’s efforts to effectively prevent a broad range of potential money laundering violations:

  • Policies to prevent money laundering have not been reviewed and/or have never been tested for effectiveness or potential improvements.
  • Policies and procedures are not followed internally and senior management lacks rigorous oversight.
  • Triggers prompting further investigation are ineffective, inappropriate to the severity of the situation, and/or are applied on an inconsistent basis.
  • Interactions are not reviewed, quantified, or acted upon, with customer call scripts failing to facilitate adequate investigation.
  • Customer responses are accepted at face value without considering all the pertinent information including customer location, affordability, transaction history, etc.
  • Operational interactions are unduly biased by player status(es) and transaction histories (e.g. VIPs).

Leveraging Proven AML Infrastructure


For government gaming regulators striving to maintain robust AML compliance both internally OR within a portfolio of third party licensees, the good news is that there is no need to reinvent the wheel. By emulating and integrating the well-established best practices of the financial sector, today’s gaming agencies can hit the ground running with a multifaceted AML compliance program. Governed by the Bank Secrecy Act (BSA) and compliant with AML institutions such as FinCEN and the Office of Foreign Assets Control (OFAC), today’s financial institutions are extremely fluent in the processes required to maintain a robust AML compliance program of sufficient scope and sophistication. To access this already proven infrastructure, government gaming regulators can tailor their licensee vetting processes to access the necessary financial tools and mechanisms to ensure prospective online gambling licensees are beholden to the highest possible AML standards, including:

  • Annual risk assessments.
  • Internal mechanisms to detect potential money laundering, sanctions, and fraud risks.
  • Internal auditing and periodic testing of AML controls and processes.
  • Ongoing compliance training.
  • Top-down organizational governance and communication.

Whichever path government regulators pursue (i.e., integrating with existing AML infrastructure in the financial sector or developing their own internal compliance program leveraging many of the same tools and mechanisms), the following tactics will undoubtedly be prioritized as mission critical priorities within the overall compliance program:

Sanctions Screening

Automation-assisted processes must exist to ensure individuals and transactions are screened for sanctions risks, prompting further investigation and the necessary escalation channels to ensure timely response as warranted.

IP Address Detection

To ensure citizen access and transactions are only occurring within the jurisdictional boundaries afforded by the scope of the operator’s license, online gambling operators should track and monitor customer IP addresses as well as attempts to access online gambling platforms via a virtual private network (VPN).

Customer Profiles

To simultaneously promote responsible gaming initiatives, protect ‘at-risk’ gamblers, and enforce robust regulatory processes to prevent excluded customers from transacting (e.g. internal employees, professional athletes, minors, etc.), online gambling operators should leverage a sufficiently robust dataset to maintain robust customer profiles for ongoing monitoring and risk-based due diligence.

Transaction Monitoring & Fraud Controls

Leveraging the deep-data capabilities of today’s online enterprise systems, licensed gaming operators should demonstrate the capability to monitor transactional and usage trends across all products and platforms to monitor, flag, and identify transactional patterns consistent with attempted money laundering, fraud, or cybercrime activity. To mitigate against potential criminal activity such as account takeovers, chargeback abuse, and bettor collusion, monitoring systems must be tuned to flag suspicious activity whilst minimizing false positive alerts, with legitimate alerts resulting in Suspicious Activity Reports (SARs) provided to compliance/enforcement staff as well as timely account terminations and/or IP blocking.

Risk Assessment

Licensed online gambling operators should be expected to maintain agile risk assessment methodologies, leveraging customer, transaction, and location data to mitigate inherent risk across all pertinent business units. Of equal importance, periodic risk assessments must recognize the intrinsic risks unique to the online gambling transactional model with key control mechanisms such as IP tracking, geolocation, and transactional trend data, utilized to mitigate key risk profiles for money laundering, fraud, and cybercrime—in real-time.

Choosing the Right Gaming Control Software as a Platform for AML Excellence


The rapid emergence of regulated online gambling as a viable platform for new tax revenues has prompted government gaming agencies across North America to progress with a number of operational models:

  • Some jurisdictions are maintaining the tightest regulatory control possible by offering government operated gambling channels as the only legal betting platform(s) for their citizens.
  • Some jurisdictions are avoiding the operational model altogether, preferring instead to vet and license experienced online gambling operators with mature product offerings, with the agency owning the critical responsibilities of ongoing licensing, compliance, and enforcement.
  • Some jurisdictions are choosing a combination of both, restricting their operational offerings to proven areas of expertise, while simultaneously expanding their channel reach through licensed and regulated third-party offerings.

Whichever path your jurisdiction chooses, it’s clear that your agency’s efforts to develop and maintain a sufficiently robust AML compliance methodology will be hugely reliant on the Gaming Control Software that you utilize internally. To facilitate the timely data transfer and business process automation common to all three potential operational scenarios, it is vital that your regulatory compliance and risk management solution can be deployed with the following proficiencies:

  • Transparency with regulatory bodies to stay abreast of the evolving regulatory landscape along with the workflow configuration capabilities required to update resultant processes, policies and stakeholders within your internal Gaming Control Software.
  • Business process automation capabilities to push notifications/alerts and track changes throughout the regulatory process.
  • Rich reporting dashboards providing regulators, boards, and auditors, with essential decision data.
  • Key risk indicators equipping agency leaders to define and monitor critical risk tolerances.
  • Aggregated risk and compliance data facilitating a streamlined audit trail via vigorous automation-assisted workflows.
  • API integrations providing ready access to legacy data sources for a consolidated view of your risk management model.

Going Forward


The rapid regulation and adoption of online gambling channels across North America presents a once-in-a-lifetime paradigm shift opportunity for government gaming agencies AND a transactional landscape fraught with the possibilities of increased money laundering, fraud, and cybercrime. A sufficiently equipped Gaming Control Software platform is the firm foundation required to capitalize on the opportunities of the former while minimizing the risks of the latter.

To learn more about POSSE GCS, our streamlined regulatory and compliance solution for the government gaming enterprise, visit our POSSE Gaming Control Software page for more information OR contact us today to schedule a no-obligation demo.