UK Gambling Commission warns of AI deepfakes in “emerging” money laundering risks

Under their UK licensing conditions, operators are required to keep up to date with emerging threats or face financial penalties or licence revocation.

The regulator hit two operators with penalties for anti-money laundering (AML) and customer care failures last month. The Football Pools was ordered to pay £375,000 (€449,732/$484,417) for AML breaches, while Corbett Bookmakers was hit with a fine of £686,070 for numerous AML failures.

In an update (8 April) to its AML and terrorist financing risks guidance, the UK watchdog said it is aware that some remote and non-remote casinos are providing unlicensed money service business (MSB) facilities, such as foreign currency exchange, third-party cheque cashing and the transfer of money in and out of casinos via a third party.

It said it is also aware that customers have made attempts to deposit large denominations of foreign currencies. This includes €500 bills.

“The sale of high-value notes, in any currency, entails a significant money laundering risk and any request to buy or sell €500 notes or quantities of other high-denomination notes should be treated as high risk,” the Commission stated.

Instances of people being offered money for their personal details in order for criminals to open multiple accounts with gambling operators have also been discovered.

The Commission said it is “concerned” about the risk of illicit mule accounts that are being opened via paid-for personal details and that those gaining access may be acting as unlicensed betting intermediaries.

AI and crypto money laundering risks

Artificial intelligence programmes and software have grown in sophistication, according to the Commission and are now being used to bypass due diligence checks.

Criminals are using AI to create false documentation, deepfake videos and face swap images and videos to facilitate the laundering of money.

The Commission has stated that all operators need to train staff in the assessment of customer documentation for AI-generated documents.

When crypto assets or crypto currencies are being used, licensed gambling companies are expected to treat those exchanges as high risks for money laundering.

The watchdog has asked operators to be “mindful” of reported crypto currency thefts, which could then be laundered through gambling platforms.

It has also said that its attention has been drawn to crash games that have been offered in illegal crypto casinos, as well as increased interest from licensed operators due to their popularity.

“There are concerns that products of this nature can allow criminals to camouflage the high-risk behaviour of cashing out quickly with limited gameplay within the context of the crash game and that transactional monitoring controls may not be effective in detecting suspicious activity,” the Commission stated.

Operators have been advised to install appropriate procedures that can identify suspicious wagering patterns in crash games.

Gambling Commission warning on black market suppliers

The UK watchdog has said it is aware that games developed by operators who hold software licences are ending up on unlicensed websites operating in the UK.

It has once again advised licence holders to ensure their supplier partners are not connected to illegal sites. If found to have occurred, operators are required to “terminate” those relationships immediately.

“It is crucial that licensees also engage proactively with the Commission when such activity is detected, providing details of the preventative measures taken to ensure the activity ceases without delay,” the Commission outlined.

The regulator has mentioned this in various public speeches over the last few months. In a January webinar, Commission CEO Andrew Rhodes warned operators they could suffer if supplier partners are found to be active in the black market.

“I don’t understand why anyone in the licensed industry would want to be in business with a company that would be supporting illegal competition,” he said at the time.

The Commission has warned that casino operators “must conduct” appropriate money laundering and terrorist financing risk assessments. Operators must also implement controls to stop money laundering, which should be reviewed regularly.

Any customers that are using MSB functions should be seen as high risk. As a result, they should be subject to enhanced customer due diligence countermeasures.

Land-based operators have also been advised to run closed-loop payment process, as the watchdog noted that it had found some operators using open-loop payment process.

These open-loop payment systems are a known money laundering risk, as they allow criminals to move money across multiple payment methods.