MONEY LAUNDERING RISKS AND E-GAMING: A EUROPEAN OVERVIEW AND ASSESSMENT

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Date: Sept,2009
EXECUTIVE SUMMARY

This report reviews the threat that money laundering through the e-gaming industry presents and could plausibly present to society, and the ways in which the regulated e-gaming industry discharges its duty to reduce money laundering in the EU. Industry representatives interviewed agree that there can be ‘leakage’ through which launderers may move some proceeds of some crimes,

though the risks associated with the sector are comparatively modest, due to the high traceability of e-gaming transactions and the customer identification controls in the regulated sector. However this report suggests that it is not a realistic policy goal for governments in a free society to eliminate money laundering risks altogether: the aim should be to reduce to a tolerable level the risk that e-gaming may assist other crimes. This is done in two ways: controls over ownership; and controls over the operation of e-gaming itself. One reason to prefer regulation over prohibition is to ensure that operators have to undergo a ‘fit and proper person’ test before receiving a licence, preventing people with links to organised crime and terrorist groups from owning what could be vehicles for laundering if there were no controls or if controls were over-ridden by powerful managers or beneficial owners.1 The second reason is to encourage e-gaming companies to develop a set of procedures approved by regulators to reduce integrity risks.

One question raised in this review is how plausible it is that a significant amount of this total laundering – in the billions of Euros – would occur via e-gaming. E-gaming (as contrasted with land-based forms of gambling) does not directly feature significantly, or indeed at all, in the recent published threat assessments of Europol and other European policing organisations, or in their policing priorities. 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 e-gaming.

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Detailed report link: here