US divided on risk of money laundering through online gambling

[clevfan]

www.complinet.com/ml/

US divided on risk of money laundering through online gambling
Emily Brayshaw in New York 05 Dec 2002


America's law enforcement agencies, regulators, credit card firms and gambling industry have expressed mixed views about the vulnerability of internet gambling to money laundering. A report from the US General Accounting Office has stated that internet gambling can be used to great effect at the layering stage of money laundering because of the volume, speed and international reach of online transactions. The offshore locations of many internet gambling sites can also make them targets for launderers.

These characteristics can promote a high level of anonymity, making the online casino a potential favourite with laundrymen. Law enforcement officials, however, told the GAO that few such cases have made their way to court. They went on to cite the absence of government AML regulation in the online gambling area as one reason for this.

The banking and gambling regulatory officials who spoke to the GAO did not think that internet gambling was particularly susceptible to money laundering. This is especially true when credit cards, which create a transaction record and are subject to relatively low transaction limits, are used for payment. Practitioners from the credit card and gambling industry were even more sanguine about the problem, believing that internet gambling was not a fertile area for money launderers. They told the GAO that online gambling was no more susceptible to money laundering than any other type of e-commerce. They also thought that the financial industry, which is responsible for the payments system, was better suited to monitoring for suspicious activity in this area than the gambling industry itself.

The GOA interviewed US state representatives and law enforcement officials — including officials in Treasury's office of the undersecretary for enforcement and the Department of Justice's criminal division — the Federal Bureau of Investigation, the Executive Office of US Attorneys, and several state attorneys general. The report itself was prepared in response to a continuing debate in the US on whether internet gambling should be banned.

US Republican Michael Oxley, who is chairman of the House committee on financial services, has said that the committee is dedicated to outlawing internet gambling in the US next year. That will not prevent offshore companies from offering online gambling, however. The battle is now looming in Congress over whether to prevent money laundering by banning internet gambling, or by tightening industry regulation, as trade groups are proposing.

The US introduced its federal bill to regulate internet gambling last month. The bill, which is pending in Congress, has also sparked a case whereby three former employees of the Native American Seminole Tribe have been put on trial for allegedly conspiring to embezzle $2.77m. Defense attorneys for the three have argued that the men diverted the money in an attempt to boost tribal revenues with a secret plan to set up an offshore internet gambling site in Belize. The three men were originally indicted in June on federal charges of conspiracy, embezzlement and money laundering. They face maximum sentences ranging from 90 to 115 years in prison, as well as fines and forfeiture of property equivalent to $2.77m.