Online Gambling and Money Laundering

Transcription

1 Online Gambling and Money Laundering S&D Seminar on Online Gambling European Parliament 14th November 2012 Dr. Ingo Fiedler

2 The European Market for Online Gambling 3,3 Revenues 2011,Total: 10 billion US$ 2,5 1,6 Sports Betting Poker Most of the revenues in illegal/unregulated markets Payout rates: illegal online >> legal online > offline Dr. Ingo Fiedler 2

3 Revenues are highly concentrated 60% 49% 31% 1% 1% 1% Players Poker Revenues Players Live Betting Stakes Players Fixed-odds Betting Stakes Dr. Ingo Fiedler 3

4 Gambling and Money Laundering Gambling as a perfect tool for money laundering Huge volume of transactions/cash flows No physical product Often tax free winnings Three different cases of money laundering: 1) Illegal gambling as an illegal transaction and a money laundering offense per se 2) Illegal transaction occured ex ante: Deposit of illegal funds via anonymous method and payout as (tax free) gambling win 3) Use of gambling as a payment tool for illegal transactions Dr. Ingo Fiedler 4

5 Analyzing different scenarios Case A: Small cocaine dealer Objective: Transfer 10,000 of illegal drug funds to legal bank account Use a prepaid card (e.g. Paysafecard) 10,000 Cash 100x100 Paysafecards Deposit 10,000 Play 9,500 3 Wire Transfers as Gambling Wins 9,500 Bank 10,000 Customers Fog: Not observable for financial intelligence 500 Operator Tax free income! Dr. Ingo Fiedler 5

6 Analyzing different scenarios Case B: Medium cocaine dealer Objective: Transfer 200,000 illegal drug funds to legal bank account Deposit via offshore accounts 200,000 Cash Switch Country 200,000 Foreign Bank s Couple of Deposits 200,000 Play 195,000 Wire Transfer + Phone Call Jackpot 195,000 Bank 200,000 Customer Fog: Not observable for financial intelligence 5,000 Operator Tax free income! Dr. Ingo Fiedler 6

7 Analyzing different scenarios Case C: Huge cocaine dealer Objective: Transfer 200,000,000 illegal drug funds to legal bank account Found an online casino Found a Gambling Operator in a tax heaven 200,000,000 Cash 200,000,000 Customer Switch Country Foreign Bank Fog: Not observable for financial intelligence Create Fake Revenues (and Expenses) 200,000,000 Business Real Expenses, taxes etc. 10,000,000 Tax Heaven 190,000,000 Business Profits Dividend payout 190,000,000 Bank Dr. Ingo Fiedler 7

8 E-cash Flows Player Deposit Option 235 payment methods Credit cards (physical/virtual) Debit cards (physical/virtual) Prepaid cards (physical/virtual) Bank wire ACH Cheque Gateways Player-to-Player transfer (P2P) (Mobil-)Telefone bill Cash Payment Processor Gambling Operator Operators s Bookmaker Betting exchanges Poker Bingo Skill Games Player Withdraw Option Payment Processor Gambling Operator Dr. Ingo Fiedler 8

9 The Complexity of E-cash Flows with payment processors Dr. Ingo Fiedler 9

10 Online Gambling as a Game-Changer to Money Laundering Low Costs More Low Risk of Detection OC Dr. Ingo Fiedler 10

11 Recommendations Taxing Gambling Wins Increases costs of money laundering Decreases profits from crime Decreases crime Law enforcement Tackling illegal gambling = Tackling money laundering Precondition for any regulation: No illegal gambling Dr. Ingo Fiedler 11