If you have ever watched the critically acclaimed Breaking Bad you will be aware of the importance of money laundering to criminals. In the TV show, Walter White is the chemistry teacher turned ‘Meth Cook’.
Whilst ultimate responsibility for anti money laundering procedures in a casino rests with senior management, the operator should encourage a culture (again, throughout all levels of staff) of alertness as to the indicators of money laundering, and of a commitment to prevent and/or detect it and report it.
Putting aside the moral questions surrounding White’s new career, he is confronted with the problem of not raising suspicion through his newfound wealth. In order to legitimise his criminal profits, White enlists the help of his wife to help him launder his money.
This is done in the show by White purchasing a car wash and putting through a huge number of false transactions. With each false transaction he adds money from his meth producing business, thus making it appear clean and legitimate to any authorities taking an interest in him.
In real life this method is used by a host of criminal enterprises. As mentioned earlier in the 1950s organized crime gangs in America would purchase casinos in Las Vegas to do just this.
However, criminals have now moved onto online casinos and gambling sites to launder money. Illegally earned cash will be used to place sure-fire bets on gambling sites, enabling future illegal income to be disguised as gambling winnings.
Is This Really Happening In Canada?
Yes. In fact, earlier this year Canadian police arrested nine members of the Calabrian organised crime group ‘Ndrangheta. The suspects were accused of illegal gambling and money laundering in the Toronto area.
Through wiretapping, surveillance and internal leaks the Canadian authorities uncovered details of a money laundering scheme that cleaned almost $70 million of ill-gotten gains mostly through gambling – both online and offline.
Within a few days of uncovering the plot the authorities had seized $26.8 million in assets and arrested further suspects in connection with Italian police. It is believed that illegal money earned through mafia activity in Italy was even being sent to Canada to be cleaned.
Details of the bust on the ‘Ndrangheta family emerged five months ago
How Do They Get Away With It?
On the face of it you might think that it would be relatively easy to spot money laundering activity at an online casino. If the criminal is patient and diligent though it can be very easy to fly under the radar and avoid suspicion.
For example, a sum of $100,000 could be deposited into an online gambling account over the course of 12 months. On an almost daily basis the account holder would deposit small amounts and wager even smaller amounts on a host of games.
To the security personnel at an online casino this activity could be viewed as normal, without arousing too much suspicion. The money laundering only becomes apparent when the deposits reach a certain amount and the customer withdraws everything at once before shutting down their account.
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Aliases and fake details will most likely have been used in setting up the account, making it nigh on impossible for the authorities to trace the money or the culprit once the account has been shut down.
How Is The Industry Combatting This?
Strict laws have been imposed and operators of a Canadian online casino must comply to standards which are akin to the laws used in Great Britain. The country’s gambling authority has produced guidelines for companies to ensure that they are doing everything possible to identify and report suspected money laundering.
This means offering the highest levels of training to staff to ensure that they are familiar with the techniques used by criminals. Money has also been invested into software that is specifically designed to spot the signs of money laundering.
Online casinos have obviously taken these steps to protect the integrity of their businesses, but they have also done so to avoid fines. The Canadian gambling authority has promised massive fines to any company found guilty of neglecting their obligation to stop money laundering.
Consequently it is getting tougher for hardened criminals to launder their money through online casinos. However, all that means is that they will move onto a new target to launder their money where the restrictions aren’t quite as tight.
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Casinos both online and offline are often tarnished as money-grabbing organizations who are involved in the conduction of criminal activity. In many parts of the world, this very much is the case — organized crime rings and triads are heavily associated with illegal gambling dens and casinos when it comes to fraud and deception. And the act of money laundering is something that has been known to happen in the back closets of some casinos for decades.
In this article, we’re going to discuss what money laundering actually is, when it started, who is at risk, and how casinos throughout the world are finally aiming to put a stop to it.
What is Money Laundering?
Let’s begin with the basic question as to what money laundering is. In a nutshell, money laundering is defined as illegally obtained money (dirty cash) that has been made to look like it was earned legally.
Criminal organizations are renowned for making millions of dollars each year from the illegal buying and selling of narcotics, extortion of firearms, and other rogue business trading. This amount of cash flow can easily alert tax authorities if these people aren’t careful about it, which is why the money is usually “laundered” through other means in order to make it look like it’s come from licit sources.
How Do Criminals Get Away With It?
Even though people are always coming up with new ways to pull tricks on the tax man, there is a general approach most of them take when it comes to laundering money.
●Placement – This first step involves placing the funds in a business registered bank account, of which is essentially the “middleman” of the operation. This is also where most people get caught if not done with care, because if large sums of money are being deposited, it looks extremely suspicious.
●Layering – In order to make sure the original source is untraceable, next the money needs to be layered. In other words, it will need to be exchanged through multiple banking transactions. And most do this by making large investments in things like property, cars, and even smaller businesses.
●Integration – Lastly, and providing the last 2 steps were successful; the money is now essentially “clean” and safer for the launderers to integrate back to their own accounts. This could be in the form of a salary complete with real invoices to prove the money was earned legitimately, or through other business investments.
What Happens to Criminals Who Get Caught?
Funnily enough, the act of money laundering didn’t become illegal until the 1990s, when unusual large banking transactions were becoming more apparent throughout most western nations. Crimes are now punishable with imprisonment for a set term in the United States. A federal conviction can also result in a fine up to $500,000, twice the amount which was laundered, or more.
In the UK, money laundering costs the country approximately £24b every year. Under the Proceeds of Crime Act, criminals who get caught can face up to 14 years in prison, as well as an unlimited fine.
In China, which is home to the world’s gambling capital of Macau, criminals caught money laundering will face a prison sentence of up to 10 years, with a 20% fine on the total amount laundered.
All countries have their own way of dealing with criminals and operations caught money laundering. But generally the punishment will include a large penalty complete with many years of jail time.
Prevention Measures
Prevention measures are also quite different in various countries. In the U.S., transactions greater than $10,000 are required to be reported to the relevant financial authorities. These include banks, credit companies, insurance firms and others.
These financial institutions must take specific steps to verify their clients and customers are genuine. They are also required to file a report to the relevant financial crime agencies if they suspect anything unusual. These are then investigated further to establish whether any action needs to be taken from that point.
Why Casinos Are A Magnet for Corruption
If you’ve ever seen the 1995 movie Casino by Martin Scorsese, you’ll probably have a good idea as to how casinos are utilized to funnel profits illegally. In some parts of the world, particularly in places like Cambodia and Macau, this is a very real scenario. The reason being that casinos are producing huge cash flows every single day, and transactions are passing through banks with a high degree of anonymity.
Casinos are also an attractive target for money launderers because these establishments don’t particularly care who is entering the venue, so long as they are spending money and not causing any trouble. Even though casinos are required to file any suspicious transactions these days, reports are carried out at the discretion of the individual responsible. In some cases, they may refrain from reporting certain activities to preserve a good relationship with a client. Especially if they are a high roller.
Casino Prevention Measures
Money laundering is becoming less probable as time goes on, but this is mainly due to casinos upping their security, and enforcing stricter rules. These include things like identity checks and setting alerts on transactions which have gone over a certain threshold. In online casinos, it’s much easier for the operators to monitor and keep tabs on unusual player behavior. This is because all records are stored electronically, such as payment transactions and betting activity, which in turn, makes suspicious behavior much easier to detect.
Al Capone: The Forefather of Money Laundering
Al Capone a.k.a the original Scarface, was an infamous mobster back in the 1920s. He was also notorious for hiding his illegal earnings from a laundromat network, along with profits made from the illegal trading of liquor during the prohibition period.
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Unfortunately for him, it didn’t take long for the feds to notice that his laundry business was making disproportionately large sums compared to what was recorded in the books. Their confirmed suspicions eventually led to his prosecution in 1931, when he was convicted of tax evasion.
Despite all the past dodgy dealings he was caught out by the police for in the run up to these events; carrying a concealed weapon, vagrancy charges, and contempt of court for feigning an illness to avoid an earlier court appearance – it was his laundromats which finally put the legendary Al Capone in the slammer.
Conclusion
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With 21st century technologies and safety measures in place, money laundering is becoming increasingly more difficult to get away with. However, with the rise of things like cryptocurrencies, which aren’t regulated or governed by any particular organization, digital currencies could lead to a new approach and way of avoiding tax evasion. In places like Canada, China and Russia, anti-laundering laws for digital currencies are being heavily discussed. As these platforms continue to see a surge in users, it will be interesting to see what roadblocks will be put in place to prevent criminals from using them to launder money. Only time will tell!