As part of their UK licensing requirements, all gambling firms operating on these shores must have in place policies and procedures that fall under the ‘anti money laundering’ banner. But increasingly sophisticated techniques, such as the use of AI and ‘deepfaking’, are making it harder to operators to spot customer accounts that pose the risk of money laundering.
So much so, the Gambling Commission has been forced to report on the ‘emerging’ risks posed by new technologies and those that adopt them with nefarious deeds in mind.
Immaculate Deception
The regulator has revealed a surge in the number of individuals attempting to circumnavigate due diligence checks on their betting accounts; using false documents in a bid to defraud an operator. But even more challenging for the sector is the number of individuals now using deepfake videos and even AI-generated face swaps to pass betting site verification checks.
There has been an increase in the number of cyber-crimes committed using this new tech – including one remarkable case in Hong Kong in which a criminal used deepfake technology to pose as a multinational company’s CEO and steal more than £15 million.
The tech required to pull off such criminal activity is becoming more readily available… and the UK betting sector is not immune to being duped by increasingly more sophisticated methods. The Commission revealed in an update to their licensees this week:
As noted by the National Crime Agency (NCA) in issue 30 of their SARs in Action publication, accounts successfully created using AI are more likely to be used for criminality, such as money laundering or terrorist financing.
The regulator has called upon UK licensed gambling firms to ensure that all verification documents supplied by customers are ‘appropriately scrutinised’, with staff trained to recognise the signs of fake or AI generated documentation. A rise in the number of customers using ‘crypto assets’ to fund their accounts has also appeared on the radar of the Gambling Commission.
Cryptocurrencies can be used as a medium of laundering firms through online gambling sites and apps, with the perpetrators of the ByBit Exchange heist in February – which saw a staggering £1 billion worth of crypto assets stolen – known to have used online gambling as a means to ‘wash’ their ill-gotten gains.
The Gambling Commission continues to take its responsibility for anti-money laundering seriously, sanctioning two UK-facing operators – The Football Pools and Corbett Bookmakers – a combined £1 million for their respective AML failings in the past few weeks alone.
Fake Accounts and Third Party Partnerships
A number of other developments are in the crosshairs of the regulator, who has called upon its licensees to ensure that their house is in order. A rise in the number of punters being targeted by typically foreign individuals and groups, who seek access to the UK betting market, has been identified. These overseas enterprises, effectively unlicensed intermediaries, will offer cash to people who set up ‘mule’ accounts with UK-facing betting firms and/or casinos.
As well as being fraud in its own right, there’s also the possibility that the individuals in question won’t receive the payment as promised – to make matters worse, they could also be exposed to the threat of identity theft. The Gambling Commission has called on licensees to analyse their customer onboarding processes to assess whether these are diligent enough, with the ability to identify where false documentation has been used or where a ‘mule’ account has been set up.
Licensees must take reasonable steps to ensure that the information they hold on a customer’s identity remains accurate.
Another topic that has been in the news a lot lately is that of white label partnerships, where an overseas betting firm will lean on the UK licensing of a domestic partner to access the market. This has been one method used by international operators to secure sponsorships with Premier League teams, who in turn then advertise their branding to audiences of millions all over the globe.
It’s a relationship that also comes with many possible regulatory issues, with the white label firm – rather than the betting operator themselves – liable for ensuring that all licensing obligations are satisfied. The Gambling Commission has designated white label deals as ‘high’ in their latest round of risk assessments, while calling upon firms to perform the maximum amount of due diligence on betting operators looking to break into the UK market in this way.
A spokesperson for the regulator commented:
Effective management of third-party relationships should assure operators that the relationship is a legitimate one, and that they can evidence why their confidence is justified. Licensees should also give consideration to any activity the third-party is involved in that is illegal in either GB or the territory in which it is conducted.