AML Guide for the Gaming & Gambling Industry

Significance of the Gaming and Gambling Industry

The gaming and gambling industries are covered under AML regulations because it is exposed to the risk of financial crimes. Much of this industry has moved online, and the combination of technology and globalization has made this a safe haven for criminals who wish to take advantage of the financial system. 

In China, over half of virtual goods transactions are linked to illegal activities. As you can imagine, this has made anti-money laundering efforts very significant in the gaming and gambling industry.  

Gaming

The gaming industry is one of the largest in the world, and it is estimated that there are over 2.5 billion players. These players spent over $152 billion on games in 2019, and it is projected that this amount will reach almost $200 billion by 2022.

Traditional ways of money laundering have become more difficult, so criminals are being creative and using the gaming industry.

In-game currencies are one of the greatest areas at risk for money laundering. They can earn the currency in a game by beating a level or selling items within the platform, but in many cases, it can be purchased with real money as well. 

Criminals can download games and create accounts under aliases to use the proceeds of their illegal activities – such as stolen credit cards. They will then buy rare avatars or in-game weapons through microtransactions. These small denomination purchases are made in a large volume, so it is difficult to trace. Once they have spent their laundered funds, they will sell in-game currency or the account itself on a third-party website. 

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Gambling

Casinos are a target for money launderers because they operate largely in cash. Most operations don't care who you are – if you walk in and have the cash to play, you are going to be welcomed!

The money launderer can then buy casino chips with illicit cash. All they have to do is play for a while and cash in the chips – then they will get a check and a receipt for gambling winnings. Now that cash is “clean” because they won it in the casino. 

Online Gambling and the Rise of Unregulated Platforms

As gambling increasingly moves online, regulators face growing challenges in monitoring and enforcing AML compliance across digital platforms—especially those operating across jurisdictions or in grey markets. Many unlicensed or poorly regulated online gambling operators present significant risks, as they often lack robust customer verification procedures or AML controls. Criminals exploit these gaps to deposit and withdraw funds with minimal scrutiny, sometimes layering transactions through cryptocurrencies or virtual wallets to further obscure their trail. Regulatory authorities are placing increasing pressure on jurisdictions to tighten oversight, and licensed operators must ensure they are not inadvertently facilitating criminal activity by associating with unregulated affiliates or payment providers.

Technology, Transaction Monitoring, and Real-Time Alerts‍

To remain compliant and effectively detect suspicious activity, gaming and gambling businesses must invest in advanced technology solutions capable of real-time transaction monitoring, behavioural analytics, and automated alerts. These systems should be designed to flag unusual betting patterns, rapid deposit-and-withdrawal cycles, or the structuring of transactions just below reporting thresholds. By integrating machine learning and data analytics, organisations can better identify anomalies and respond swiftly to evolving typologies of financial crime. Integrating tools such as sanctions.io enables operators to screen customers against global sanctions, PEP, and watchlists at onboarding and throughout the customer lifecycle, further strengthening AML defences.

Overview of AML Regulations

AML regulations are established by the Financial Action Task Force, FATF, and by the U.S. Department of Treasury’s Financial Crimes Enforcement Network, FinCEN. If you are doing business in other areas like the European Union, you will be subject to their anti-money laundering directives and other laws instituted by their regulatory authorities.  

Although casinos are not banks, FinCen has published regulations specifically for the gaming and gambling industry which requires the following:

• an internal control system that ensures compliance with the Bank Secrecy Act
• proper training for staff so that they can identify suspicious activity 
• adequate record-keeping in compliance with the Bank Secrecy Act
• identifying customers through their name, address, and Social Security number 

It is important to note that casinos are not generally required to identify customers unless they trigger certain requirements, such as currency transaction report.

Best Practices for AML Compliance in the Gaming & Gambling Industry

The American Gaming Association – AGA - has guidelines for best practices to comply with anti-money laundering regulations. the following are some of their recommendations to create strong anti-money laundering practices and a culture of compliance within your organization. 

The Risk-Based Approach

Utilising a risk-based approach is an essential best practice when it comes to AML compliance. Your processes should include a risk assessment that allows you to identify the areas that are most at risk for money laundering.

For example, where are the entry and exit points for money that is coming from illicit sources? Cash deposit accounts and check cashing services at the casino will likely be at greater risk.

One way to combat these risks is to not allow cash for cash exchanges or refuse to accept cash to initiate a wire transfer or buy a casino check. For example, if there is a patron with large cash-in transactions, but no cash-out activity that cannot be reasonably explained through gaming activity, further review measures should be taken. 

Which casino games are most likely to be used for fraudulent activity? Remember that the goal of a money launderer is to move funds through the casino through games so that they can get a receipt for gambling winnings. Games where the individual can play both sides of the bet, like craps or roulette, are riskier because they can bet both sides so that the funds can be laundered through the game. 

Employee Training

Your organisation should have an anti-money laundering compliance officer that has expertise in managing risk and ensuring compliance with AML regulations. They should be able to implement the anti-money laundering framework and serve as a resource for the rest of the organisation. 

All employees should be trained - and receive ongoing training - so that they can recognise red flags that can be used to identify illegal activities. Those employees who operate casino games should be trained to recognise a change in an individual's playing patterns or suspicious use of services.

Know Your Customer Process

The Know Your Customer process should always involve identifying your customers when they are opening a front money account, credit accounts, or a safety deposit box with your organisation. You should obtain their name, address, and Social Security number if necessary - verify that this information is correct by requiring proof of identification like a driver’s license. 

Consider ongoing and enhanced due diligence measures for customers that seem to have a very high volume of transactions. This red flag may prompt you to obtain more information from the customer, such as what is the source of the funds. In addition it is recommended to check if the customer is on any sanctions list or on any other list such as Interpol's / FBI's most wanted or any other lists of criminals. If necessary, you must file a suspicious transaction report.

_Summary

The gaming and gambling industries are particularly vulnerable to money laundering and other financial crimes, especially as both sectors increasingly shift online. Criminals exploit in-game currencies, microtransactions, and anonymous online platforms to launder illicit funds. Similarly, in physical casinos, the use of cash and ease of buying and redeeming chips provide opportunities to disguise the origins of criminal proceeds. Regulatory bodies such as the Financial Action Task Force (FATF), FinCEN, and EU authorities have introduced specific anti-money laundering (AML) obligations for these industries, including customer identification, staff training, and record-keeping.

To maintain compliance and mitigate risk, organisations must adopt best practices such as conducting risk assessments, monitoring suspicious games or transactions, and training employees to detect red flags. A strong Know Your Customer (KYC) process, enhanced due diligence for high-risk customers, and regular screening against sanctions lists are critical components of an effective AML programme. With the rise of unregulated online platforms and growing use of cryptocurrencies, investing in advanced transaction monitoring tools and real-time alert systems is essential.

Photo by Carl Raw on Unsplash

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