Examples of money laundering in casinos

Money laundering in casinos is often associated with organised crime families who have traditionally used casinos as a way to conceal the origins of their illegally obtained funds. Money laundering laws first came into effect in the 1930s and the practice remains highly illegal. Guilty parties that are prosecuted in a court of law can face jail sentences up to 15 years. There are a variety of ways that money laundering can be accomplished, especially in a casino. Money laundering is generally done in stages, but there are simpler ways that criminals have found to do it. In the article below, we’ll be taking a look at what a typical money laundering scheme is, the reasons behind it, some examples, and how we can prevent money laundering from happening.

A Typical Money Laundering in Casinos Scheme

One of the most famous recent examples of money laundering in casinos is known as the Vancouver Model. Reaching its peak in 2015, the Vancouver Model involved organised crime syndicates from China laundering billions of dollars through casinos in Vancouver. Crime syndicates from China would give Chinese citizens newly arrived in Vancouver large amounts of illegally obtained cash. This money was then taken to a casino, exchanged for chips and briefly used to make small bets. Once transferred from chips back into cash, the money was free of its original illegitimate origin and considered ‘clean’. The money laundering process is done in three steps: placement, layering, and integration. Placement is when cash is procured by criminals and is introduced into a financial system such as a casino. As we’ve seen, ‘dirty money’ is used to buy chips, which are then converted back into cash and considered ‘clean’ as it then has a legitimate source. Criminals often use fixed-odds betting terminals when cashing out, as this method provides them with a receipt that can be used as evidence of their ‘winnings’. Layering is a series of quick transactions performed to form a paper trail, which obscures the original source. The reason why casinos are used is simple: ‘Dirty’ money easily gets lost with ‘clean’ money due to the high volume of transactions which take place. Integration is when the money is reintroduced into the economy and may now be used without risk.

Why is money laundering in casinos popular with criminals?

Money launderers look for cash-based service industries with high turnover rates. Al Capone famously used a series of laundromats to ‘wash’ proceeds obtained from illegal bootlegging. Given that laundromats are a purely cash driven industry with no real way to tell how much custom they get, this method worked very well for Capone, for a while. When the sums got too big to be put through a normal laundry – washing a million dollars of clothes a month looks suspicious for even the biggest laundromat – then the Mob had to come up with another idea. After Capone’s conviction for tax evasion, mob boss Meyer Lansky pioneered the method of laundering money via casinos. In a casino, large sums of money can be procured relatively quickly without arousing suspicion. Casinos are completely anonymous and very few questions are asked of high rollers. These days, cashouts can even be done via a machine. Add to this the fact that it is almost impossible to prove just how much money any given player has won or lost, then you can see why casinos have long been popular money laundering targets for organised crime.

Money Laundering in Casinos Online

If you thought that money laundering in casinos was exclusive to land-based casinos, then think again. The practice occurs just as often in the digital world as it does in the physical one. Online casinos are generally watch closely by a variety of regulatory bodies which enforce various standards to ensure the safety of players. However, criminals are constantly working to find new ways around these regulations. For example: casinos do not have any legal requirements to follow through with player verification in a timely manner. Criminals can take full advantage of loopholes like this by using fake ID to create bogus accounts with which to move funds. A criminal can easily pump money in and out of an online casino and then close the account before the casino realises anything untoward has happened. This is usually done in two ways: chip dumping and cryptocurrency exchange. Chip dumping occurs when one player purposely loses a large sum of money to another. These players could be sitting in the same room so all the ‘winning’ player needs to do is make a withdrawal and they’ll have clean money. Cryptocurrencies are unregulated and some illegitimate casinos allow criminals to exchange cryptocurrencies for cash.

Prevention of Money Laundering in Casinos

Preventing money laundering in online casinos is difficult. Right now, there are thousands of unlicensed online casinos that escape scrutiny and regulation. This creates a breeding ground for money launderers. Legitimate online casinos face a constant battle against money launderers. A few iGaming companies have developed fraud detection software that can minimise the risk of money laundering via online casinos. However, criminals are always developing techniques and technology to exploit potential loopholes. Land-based casinos must have systems in place to prevent money laundering and financing for terrorist groups. These measures include monitoring suspicious behaviour, keeping records of all transactions, performing checks on customers, ensuring that casino employees are honest, requiring senior management to make regular anti-money laundering reports, and taking a risk-based approach to manage money laundering. Assessment of staff adequacy and security systems are also highly necessary procedures. Online casinos have very few of these measures available to them and so remain targets for money launderers. To sum it up, there is only so much that casinos can do to prevent money laundering since criminals will continue to find new ways to circumvent any new systems or regulations. However, the online gaming industry is constantly striving to combat money laundering and it is hoped that technological advancements in tracking money and verifying ID will stem the flow of illegal money laundering.