MONEY LAUNDERING

http://www.casinomeister.com/news/
october2002.html#statement

IGC says not a big threat from online gambling.

The Interactive Gaming Council was doing what it does best, representing the industry as a whole this week in responding to questions on money laundering from the international Financial Action Task Force.

In its submission, the IGC pointed out that online gambling, with a combination of regulatory oversight and use of technology - while facing the same threats as real-world gambling facilities - is in a better position to address these risks. "Online gambling does not lend itself to any form of cash movement because of the online nature of the business, specifically, there is no face-to-face contact in the business," the IGC states. And whatever exposure the interactive gaming industry does have to money laundering can be effectively mitigated through rigorous regulation, the organization adds.

The IGC was formally responding to a request for comments on an FATF consultation paper. The FATF, based in Paris, is devoted to combating money laundering and its recommendations have been endorsed by more than 130 countries.

The IGC told the FATF that stringent player registration and ongoing verification processes for online gambling, in conjunction with the appropriate regulatory oversight and banking regulations, satisfy the "know your customer" requirement that is basic to any fight against money laundering. This, combined with the advanced computer technology that's available to Web site operators, is a strong deterrent to money launderers.

"Using software technology tools, online gambling operations can scrutinize 'inconsistent' behaviour, capture and report the transaction, and freeze the funds pending investigation. When performed in conjunction with a licensing authority this is a potent weapon," the IGC says in its FATF submission.

The IGC states that "There is no indication that legal online gambling sites have laundered money," adding that "A more significant threat lies with online auctions where items with a minimal 'real' cost can be 'sold' for $1,000 and the profit then laundered at the online auction house."

Nevertheless, Smith said, vigilance is needed. The concern is not so much with the money coming in to an online casino or sports book, but with the money going out. IGC members have policies that prevent transfers of funds (winnings or return of deposits) to parties other than the individual who originated the transaction.

"That's critical," Smith said. "You can't let players tell the casino to send checks or wire money all over the place. That money must go only to the player who registered at the site and did the betting. It's also best if the money goes back the same way it came in. In other words, if a player starts playing on a credit card deposit, it's best if any winnings are credited to the same credit card. Unfortunately, most U.S. credit card issuers won't permit that."

The ultimate weapon against money laundering, the IGC believes, is government regulation of the online gaming industry, which "should be subject to the same regulatory requirements as regulated land-based gambling organizations."

The IGC further contends that attempts to prohibit, rather than regulate, the industry have driven some operators underground, to jurisdictions that don't follow the anti-money laundering measures promoted by the FATF.

The complete text of the IGC submission to the FATF is posted on the IGC Web site, www.igcouncil.org.




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