The introduction of new merchant codes to identify legal online wagers has spurred a handful of U.S. banks to reconsider the compliance risks of processing payments for the online gaming industry, according to sources.
Since the 2011 indictment by the U.S. Justice Department of some of the most prominent online gambling sites in the world, the financial risks posed by Internet betting have changed, believes Christine Duhaime, barrister and solicitor at Vancouver-based Duhaime Law.
Undercover investigators, acting as a phony payment processor, used U.S. bank accounts to see how offshore gambling operations transacted more than $30 million with their American clients, according to federal prosecutors.
The U.S. Justice Department is seeking $3 billion in forfeitures and fines from three of the largest online gambling businesses and the financial institutions and individuals that helped to process bets.
A report by an intergovernmental watchdog highlighting the anti-money laundering weaknesses of more than two dozen countries is prompting non-bank financial institutions to drop customers and avoid risky markets.
Partisan bickering and a backlog of legislation are stymieing congressional attempts to overturn a controversial ban on online gambling before a June enforcement deadline, according to analysts.
Online securities and futures firms should speak regularly with regulatory examiners about the sorts of financial crimes that are raising concerns, according to E*Trade's top AML officer.
A recent penalty by an Australian financial regulator against e-commerce site PayPal for weak anti-money laundering controls could prod U.S. regulators to more closely scrutinize companies with similar business models.
A Canadian national laundered nearly $380 million and illegally processed payouts from online gambling companies to their U.S.-based customers, according to a federal indictment released Thursday. The indictment seeks more than half-billion dollars in forfeitures.
Sweden has granted a banking license for an Internet videogame that allows players to use real money to buy virtual goods, the first time such a license has been granted for online financial services.
Canadian payments company ESI Entertainment Systems Inc. will forfeit $9 million in a deferred prosecution agreement with the U.S. Justice Department for its role in helping to launder proceeds from an illegal gambling operation.
The growth of the online auction industry, which is not subject to anti-money laundering requirements, has translated into opportunity for criminals to launder ill-gotten cash because there are few checks on the legitimacy of online transactions, say AML compliance professionals.
Federal law prohibits banks and other financial institutions from "knowingly" accepting funds from Internet gambling operations. But the law is not clear about what constitutes knowingly accepting funds, observers say.
Financial institutions can expect regulatory examiners to pay closer attention this year to the identity theft and fraud control measures of their online offerings, say compliance lawyers.
In testimony before the House Financial Services Committee, online payment processors, data security professionals and other experts called for the licensing of Internet gambling businesses but could not agree on whether current technology can successfully verify the identities of online bettors.
If online payments system e-gold, Ltd. is convicted on charges of operating as an unlicensed money services business and other crimes, significant changes could be in store for similar digital currency businesses and the banks that service them.
The growth of virtual economies on the Internet presents an opportunity for criminals, who can launder money by trading virtual property and converting profits from virtual cash to real currency, according to a report issued by consulting firm Deloitte.