Fraud moves at the speed of light. How can crime fighters keep up?

Fraudsters have never been short of new tools. What has changed, say the leading European investigators and law enforcers is how quickly they use them. Instant payments, cryptocurrencies and crypto-based underground banking now move money across borders in seconds. The agencies chasing that money often still move in months. Closing the gap, argued Giuseppe Lopez, head of Europol’s European Financial and Economic Crime Centre, is now the central task for police and gambling operators alike.

Lopez, Francesco Venditti of the Guardia di Finanza, Italy’s financial police, and Jason Sandoval, a former investigator with America’s Drug Enforcement Administration who now runs European operations for Asset Reality, all spoke with iGB last week at SiGMA World in Rome. The conversation focused on how criminal networks exploit weaknesses in payments, onboarding and transaction monitoring.

The numbers are grim. In a survey published last year by Sumsub, an identity-verification firm, 82.9% of iGaming operators reported an increase in fraud and 41.9% named the deposit stage as their main weak point.

The weak link

Lopez’s diagnosis is simple. “Fraud is getting faster and faster,” he told iGB. Fast systems are inevitably exploited by criminals and the only answer is co-operation that lets law enforcement be “as fast as they are”. Gambling, he stressed, is one of the key areas in which Europol operates, particularly against money laundering. Much of its raw intelligence comes from suspicious-transaction reports (STRs). “We cooperate at national level, including through the suspicious-transaction reports that come from obliged entities,” he said.

The weak link is what flows back, he pointed out. Europol wants to give operators feedback, so they can learn to spot the anomalies that become evidence, or at least a lead.

Immediate response

Sandoval, whose firm helps authorities seize, manage and liquidate physical and digital assets, wants a mandated feedback loop, so that a firm filing a report can expect some kind of response. He also wants artificial intelligence put to work on data that authorities already hold. Operators, he said, “file millions of STRs. There are five million or something, crazy numbers sitting out there now that haven’t been analysed.”

Ideally that would come with an overhaul of the system of mutual legal assistance treaties, under which a cross-border request can take six months to process. By then, he said, “the crime that you’re trying to prove is long gone”.

Criminals, he observed, have no procurement cycles and no bureaucracy, and only one aim: make money. “We have to be prepared to be a step behind, but we also have to be prepared to respond immediately,” he said. Tackling digital crime with an analogue response, he warned, can have only one outcome: “They’re going to outrun us on a digital rail.”

Stronger partnerships

Help may be coming, at least in Europe. Lopez pointed to the EU’s recently established Anti-Money Laundering Authority (AMLA), whose remit includes gambling. Europol plans to work with it and with private partners to build a stronger partnership.

The new Anti-Money Laundering Regulation creates fresh co-ordination mechanisms, including partnerships under Article 75. These allow public and private bodies, gambling operators among them, to exchange information for operational purposes. For an industry accustomed to sending reports into what can feel like a void, that is potentially significant, if a regulator still finding its feet can make it work in practice.

That alignment is what strikes Pierre Tournier, interim secretary general of the European Gaming and Betting Association (EGBA), the online operators’ trade body, who spoke to iGB. Gambling is a political hot potato, and an industry lobby asking for lighter rules gets a frosty hearing. Enforcement is another matter.

“When it comes to enforcing the law against illegal operators, I think we are all in it together,” Tournier said. “When it comes to enforcement, I can assure you it’s a very different, and much easier, conversation to have with everybody.”

Tracing cryptocurrency

The threat is not confined to licensed operators’ own platforms. Venditti, who heads the Special Unit for Combating Technological Fraud at Italy’s financial police, the Guardia di Finanza, describes its mission as making sure the offshore black market does not outcompete the regulated one. It is not an easy task. “It’s a hard job because, as you know, crypto gambling is increasingly taking over this sector, and it’s quite difficult to trace all the blockchain transactions made to illicit gambling sites,” he said.

Such sites market “provably fair” games, whose results players can check on the blockchain themselves, and players increasingly prefer them. Yet they offer none of the guarantees of sites licensed by ADM, Italy’s Customs and Monopolies Agency, said Venditti. “We have a specialised unit that deals with the crypto market and the dark web, called the OSINT Unit [Open Source Intelligence]. We tackle the problem by tracing cryptocurrency, seizing or freezing it where possible, and shutting down illegal online gambling sites.”

Gaming itself is a channel, too. The liquidity, volume and stability of gambling and iGaming are precisely what attract criminals, Sandoval argued. He cited countless cases of in-game coin exchanges being used to move money to partners on the other side of the world who might be shipping illegal goods or trafficking people.

Speed matters

For Lopez, the legal machinery is not the obstacle. Procedure, he said, is no problem. Co-operation can be built within it. What is missing is closer contact, so that information can be exchanged “at the speed of light”. Without that, he warned, “we can not intervene in time”.

For operators, the implication is clear. Filing a report and moving on is no longer enough. Investigators now want a conversation, and they want it fast.