Explain Gambling In Detail

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There are several key methods that criminals deploy when money laundering. Many groups rely on breaking up the deposits into small tranches to avoid flagging in a practice known as structuring. Others simply buy chips with cash, spend some time on the casino floor and attempt to cash them out as winnings. There are many methods that involve the use of shell companies to conceal transactions, bank accounts and individuals involved. It is an incredibly complex area of finance and one that the authorities are fighting tirelessly to stamp out in all forms.

What Makes Casinos the Perfect Target?

Most casinos strive to carefully level their wheels, because tilted are easier to beat by professional players. Even on a sturdy roulette table, and very carefully level roulette wheel, the simple act of a player leaning against the table is enough to create a significant tilt of the wheel, and therefore dominant diamonds affect. The standard 52-card deck of French-suited playing cards is the most common pack of playing cards used today. In English-speaking countries it is the only traditional pack used for playing cards; in many countries of the world, however, it is used alongside other traditional, often older, standard packs with different suit symbols and pack sizes.

Casino gambling is a brilliant way to make money disappear, and reappear in separate bank accounts. Obviously, the casino industry takes measures to make this difficult which we will explain in more detail down the page. The casino does not necessarily need to be complicit in the money laundering activities for criminals to be successful, but many have known to be in the past. With so many underground markets operating throughout Asia, Europe and America – criminals have plenty of casinos and sports betting operators they can exploit to launder their dirty cash.

Without the compliance of the regulated casino industry, this is an uphill battle that the authorities cannot fight alone. There are many motivated, and well-funded criminal gangs that are persistent in their efforts to use casinos to launder money. Within the casinos, themselves exist many vulnerabilities that can be easily exploited. The staff in casinos represent one of the biggest risk factors for money laundering, as they are often low-paid administrative staff that can be easily bribed or threatened to assist the criminals laundering their money.

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But what makes the casino money laundering so appealing rather than off-shore shell companies or other such methods.

The three biggest reasons for money laundering at casinos are:

  • Casinos and sports betting operators have enormous cash flows that make it easy to bets intended for money laundering within the sea of transactions flowing in and out.
  • It doesn’t matter who you are, whether you’ve been convicted of financial crimes or where your money comes from. The majority of casinos around the world are happy to accept wagers from anyone with hard cash to gamble.
  • High-rollers are a major source of profit for many casinos – in order to maintain a strong a favorable relationship with the client, staff may ignore or turn a blind eye to any suspicious transaction.

As you can imagine from the above statements, revenue and profit are huge motivating factors for the casinos. It is difficult to deny that casinos are powerless to stop this activity, and certainly more needs to be done from industry regulators to enforce systematic checks on customers that set-off red flags with suspicious depositing activity.

Industry regulators certainly have a part to play, by scrutinizing large casino companies around the world they regularly audit and analyze financial statements looking for irregularities. The biggest operators make enough money from legal transactions, and it tends to be smaller casinos in less stringent jurisdictions that are complicit with money launderers. In Asia, there has been a long-term problem with this illegal activity – and a thriving underground gambling industry.

Things are a little different online, especially if you are gambling in the UK or another strictly regulated market. If you are worried about what might be going on at your favorite casino site, have a look at our guide to casino safety to see what reputable sites are doing to keep everything above board.

Fighting Against Money Laundering with Regulation

Within tightly regulated industries such as Europe and North America casino money laundering is a very low threat to operations. The regulators in these territories are very diligent, using a mixture of law enforcement integrations, technology, and correct procedures to mitigate the problems. Communities in Europe and North America are more resistant to the risks associated with exposing themselves to organized crime and are more active in their resistance to money launderers.

However, the Asian gambling industry is worth over $180bn annually. Before the market became such an enormous part of the local economy, a strong and thriving underground gambling scene was firmly established. Even now that big corporate casino interests have a firm hold on the market, the dark underbelly still remains.

Certain casinos within Asia are notorious for being connected to the criminal underworld – on a much larger scale than any European equivalent. It has been proven in the past that the Yakuza has a strong grip over many gambling operators in Japan, and in South-East Asia there have been several high-profile match-fixing and money laundering busts in the past decade.

The tide is turning though. Many of these casinos have begun enforcing identity checks on their new customers. More importantly, the range of payment options that was previously available has been refined to a select few, in this scenario payments are much more easily traced. The ability to use different accounts for deposits and withdrawals has enabled casino money laundering in the past, ending this practice will do a great deal for squashing the remnants of money laundering in this industry.

Is the Game Up for Money Launderers?

Obstructing the use of casinos as a vehicle for money laundering is a constant battle between law enforcement, criminals and casino operators. In the UK, customer check procedures are continuously improving, and in its current state, the system is highly impenetrable. The same rings true for much of Europe and North America. However, the lackluster approach to financial scrutiny in certain jurisdictions continues to allow the practice of money laundering to sneak under the radar. The amount of money involved is truly staggering, with that comes powerful and illicitly motivated groups who are determined for their business to go uninterrupted. The battle rages on between criminals and the authorities who are often left chasing shadows.

You can find out more info about how casinos stay safe from crime and how internet gambling is regulated in this section of our guide to real money casino gambling.

Money Laundering meaning in law

Money laundering is a term used to describe a scheme in which criminals try to disguise the identity, original ownership, and destination of money that they have obtained through criminal conduct. The laundering is done with the intention of making it seem that the proceeds have come from a legitimate source. A simpler definition of money laundering would be a series of financial transactions that are intended to transform ill-gotten gains into legitimate money or other assets. To explore this concept, consider the following money laundering definition.

Definition of Money Laundering

Noun

  1. The act of disguising the source or true nature of money obtained through illegal means.

Origin

1300-1350 Middle English Launder: to wash

1970-1975 Term first applied to legal concept of money laundering

What is Money Laundering

When money is obtained from criminal acts such as drug trafficking or illegal gambling, the money is considered “dirty” in that it may seem suspicious if deposited directly into a bank or other financial institution. Because the money’s owner needs to create financial records ostensibly showing where the money came from, the money must be “cleaned.” Therefore money laundering means running the money through a number of legitimate businesses before depositing it. Because the act is specifically used to hide illegally obtained money, it too is unlawful.

Different jurisdictions, both foreign and domestic, have their own specific definitions of what acts constitute the crime of money laundering. Which enforcement agency has the authority to investigate money laundering, as well as punishments for the crime, are outlined in the statutes of each jurisdiction.

It has been estimated that at least $300 billion is laundered each year in the United States alone. According to a 2009 study published by the United States Sentencing Commission, more than 81,000 people are convicted of money laundering on some level each year in the United States.

Steps in Money Laundering

Money laundering is accomplished in many ways, though most include three common steps, including

  1. Obtaining the money or introducing it into the financial system in some way
  2. Transferring or concealing the source of the money through complex or multiple transactions
  3. Returning the money back into the financial world so that it appears legitimate.

Of these steps, placement of the money into financial institutions is the most difficult. This is because the Bank Secrecy Act of 1970 requires financial institutions to report deposits over $10,000 in a single day. To circumvent this step then, launderers funnel cash through a legitimate high-cash business, such as a check cashing service, bar, nightclub, or convenience store.

Ways Criminals Avoid Detection

Large scale criminal groups may use complex money laundering techniques in order to avoid detection. However, smaller scale criminals or first time offenders often use simpler methods in their attempt avoid detection. Such money laundering techniques may include:

  • Transferring money from bank to bank or from account to account
  • Breaking up large amounts into smaller bank deposits
  • Purchasing money orders in smaller money amounts
  • Breaking the cash into small amounts and purchasing cashier’s checks

For example, Sally steals a large amount of cash from her business. She wants the money to go undetected, so instead of making one large deposit into her savings or banking account, she breaks the money up and deposits one small amount each week. This ensures the bank does not look at her transaction suspiciously since it is uncommon for her to deposit large sums of money.

Money Laundering Techniques

There are many forms of money laundering though some are more common and profitable than others. Some of the more popular money laundering techniques include:

  • Bulk cash smuggling involves literally smuggling cash into another country for deposit into offshore banks or other type of financial institutions that honor client secrecy.
  • Structuring, also referred to as “smurfing,” is a method in which cash is broken down into smaller amount, which are then used to purchase money orders or other instruments to avoid detection or suspicion.
  • Trade-based laundering is similar to embezzlement in that invoices are altered to show a higher or lower amount in order to disguise the movement of money.
  • Cash-intensive business occurs when a business that legitimately deals with large amounts of cash uses its accounts to deposit money obtained from both everyday business proceeds and money obtained through illegal means. Businesses able to claim all of these proceeds as legitimate income include those that provide services rather than goods, such as strip clubs, car washes, parking buildings or lots, and other businesses with low variable costs.
  • Shell companies and trusts are used to disguise the true owner or agent of a large amount of money.
  • Bank capture refers to the use of a bank owned by money launderers or criminals, who then move funds through the bank without fear of investigation.
  • Real estate laundering occurs when someone purchases real estate with money obtained illegally, then sells the property. This makes it seem as if the profits are legitimate.
  • Casino laundering involves an individual going into a casino with illegally obtained money. The individual purchases chips with the cash, plays for a while, then cashes out the chips, and claims the money as gambling winnings.

Anti-Money Laundering Laws

Anti-money laundering laws reflect an effort made the government to stop money laundering methods that involve financial institutions. Under the guidelines set forth by anti-money laundering, or “AML” financial institutions are required to verify large sums of money passing through the institution, and they are required to report suspicious transactions. It is estimated that money laundering is so prominent globally, that it is impossible for the Financial Action Task Force to produce estimates or figures as to its scope.

Financial Action Task Force

The Financial Action Task Force (“FATF”) was formed in 1989 by a coalition of countries. This intergovernmental agency was designed to develop and promote international cooperation for combating money laundering. As of 2015, the FATF is comprised of 34 different countries, but the agency is always seeking to expand its membership to more regions. Headquartered in Paris, France, the FATF also works to combat the financing of terrorism. The FATF has developed recommendations to combat money laundering, and the agency has three functions in regards to this criminal activity:

  1. Monitoring the progress of member countries in their anti-money laundering measures
  2. Reviewing trends and techniques in money laundering, reporting these, as well as new countermeasures, to member countries
  3. Promoting FATF anti-money laundering measures and standards globally
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Bank Secrecy Act

The Bank Secrecy Act (the “BSA”) was enacted by Congress in 1970, as an effort to combat the use of financial institutions in money laundering crimes. The Act contains laws that require financial institutions to report certain transactions to the United States Department of Treasury, including transactions in excess of $10,000. The institutions must also file a Suspicious Activity Report, or “SAR,” if they consider any financial transaction suspicious or believe the funds comes from unlawful activities. The Act is also responsible for the creation of the Financial Crimes Enforcement Network, which makes reports of money-laundering or suspicious activity available to criminal investigators around the world.

Other Anti-Money Laundering Regulations

Since the BSA was created, many other legislative acts and money laundering regulations have came about to strengthen the movement. These include:

  • The Money Laundering Control Act of 1986, which prohibits engaging in any transactions involving proceeds generated from illegal activities.
  • The 1988 Anti-Drug Abuse Act, which expanded the definition of “financial institution” to include car dealers and real estate personnel, requiring them to file reports on transactions involving large amounts of currency.
  • The 1992 Annunzio-Wylie Anti-Money Laundering Act, which requires more strict sanctions for violations of the BSA, and requiring additional verifications, recordkeeping, and reporting for wire transfers.
  • The Money Laundering Suppression Act of 1994 requires banks to develop and institute training in anti money laundering examination procedures.
  • The Money Laundering and Financial Crimes Strategy Act of 1998 requires banking agencies to develop training for examiners.

Explain In Details Gambling

Unfortunately, as these money laundering regulations are put into place, criminals work to find new methods to prevent their activity from becoming detected or considered suspicious.

The Role of Financial Institutions in Combating Money Laundering

In this age of electronic transactions to and from financial institutions around the globe, anti money laundering laws attempt to quell money laundering by requiring these institutions to identify and report suspicious activities. Technology has also paved the way for anti-money laundering software, detects large increases in account balances or large withdrawals, and which filters data and classifies it according to levels of suspicion. Software is also used to detect transactions with banking institutions in blacklisted or hostile countries. When such transactions are identified, the program alerts bank managers who then study the information and decide whether it should be reported to the government.

Penalties for Money Laundering

The penalties for money laundering vary greatly depending on the circumstance and the amount of funds involved. The penalties may also vary if the acts occurred in more than one jurisdiction. In addition to imprisonment, punishment for money laundering may include large fines, restitution, and community service. Typically, the more money involved, the harsher the punishment.

Money Laundering Example Cases

Money laundering is not uncommon, but some money laundering cases have met the spotlight due to the severity of the act, or the amount of money involved in the crime. Large-scale money laundering cases often involve global transactions. Below are some famous examples of money laundering cases.

  • In 2012, HSBC Holdings, a London-based company, paid nearly $2 billion in fines after it was discovered that the financial institution laundered money for drug traffickers, terrorists, and other organized crime groups throughout Iran. The laundering went on for many years before the activity was detected.
  • In 2014, BNP Paribas, a French bank with global headquarters in London, pled guilty to falsifying business records after it was discovered the institution violated U.S. sanctions against Cuba, Sudan, and Iran. As a result, BNP was forced to pay a fine of $8.9 billion which is the largest fine ever imposed for violating those sanctions.
  • In the 1980s, the Bank of Credit and Commerce International, a bank registered in Luxembourg and with offices in London, was found guilty of laundering an amount of money estimated to be in the billions for drug traffickers.

Explain Gambling In Detail Example

Related Legal Terms and Issues

  • Agent – A person authorized to act on behalf of someone else, such as an employee, broker, or sales representative.
  • Asset – Any valuable thing or property owned by a person or entity, regarded as being of value.
  • Embezzlement – The act of stealing or misappropriating funds.
  • Intent – A resolve to perform an act for a specific purpose; a resolution to use a particular means to a specific end.
  • Jurisdiction – The legal authority to hear legal cases and make judgments; the geographical region of authority to enforce justice.