Why Online Sports and Gambling Need AML/CTF?

Online Sports and Gambling operators act on behalf of their clients, engaging in activities of placing a bet on the outcome and putting money on a horse.
Online Sports and Gambling operators act on behalf of their clients, engaging in activities of placing a bet on the outcome and putting money on a horse. As a business of betting or wagering, you need to put anti-money laundering/counter-terrorism financing (AML/CFT) measures in place if you engage in the following activities on behalf of a client:

RISK EXPOSURE

Online Sports and Gambling g activities, including betting in race circuits, are cash-intensive and involve huge monetary transactions. Complex transactions can camouflage the illegal sources of the cash through layering. The speed of cash flying through gambling operations allows the proceeds of illicit funds to be laundered easily. The ability to receive cash from associates and to pool together funds from multiple sources, exchange money, store money in betting accounts for a period before cashing out, “messenger betting” or placing “cash-out bets” are practices that expose them to risks of money laundering and terrorism financing (ML/TF).

COMPLIANCE REQUIREMENTS

All betting and gambling businesses, including sportsbooks and tech-driven betting platforms, must begin by registering with your regulatory authority. Further, you must demonstrate a strong culture of compliance by reporting physical cash receipts or transactions above the prescribed amount, despite any deemed betrayal of client trust. Extensive customer vetting is required, including KYC and IDV, client due diligence, monitoring, record keeping, and reporting of out-of-state bettor transactions, especially involving foreign currencies, transactions with cryptocurrency exchanges, or sanctioned entities or countries.

GAPS IN COMPLIANCE

The ability to use the betting platforms to store or transfer illegal cash, manipulate transactions and conceal any unlawful activity, allows clients to conceal illicit gains and avoid statutory laws. This exposes the betting businesses to ML/TF by being facilitators or acting on behalf of their client. Conflict of interest, lack of legislation and regulations in “live betting”, the fear of losing business in the race to attract a wider pool of bettors, are the biggest gaps in compliance in the sports and race betting sector.