Usually the player will have to forward copies of some form of photographic ID such as a passport or driver’s license and a utility bill to confirm the address. This is a similar process that banks use when clients want to open a new account. 

Online operators also have technology in place where they can tell the location of where the client is accessing the website from, any unusual patterns can be easily identified by the software. It can also be used to cross check the location of where the client claims to be based. 

The online operator also makes it very difficult for someone else to gain access to a clients account or access the account details; this is done through sophisticated encryption software. 

Compared to a land based Casino where it is not always necessary to set up a client account, internet operators seem to be well regulated. Even if someone was prepared to go through all of these identity checks in order to launder money via the internet, the operators have systems in place where unusual or suspicious betting patterns are recorded. Betting on the internet is not anonymous as it is on land, all transactions are logged on the website. 

Another advantage that the internet operators have when combating money laundering is that they don’t deal in cash, money laundering is extremely difficult where cash is not an option. The use of credit cards provides a clear record of every transaction by the client on the internet. John Cargnello, Chief Executive Officer of Technical Systems Testing, feels that “it is quite apparent that the obstacles to laundering money in a properly regulated internet casino are enormous, if not insurmountable”. 

In an investigation by the Nevada Gaming Control Board published in April 2003 following a two month investigation into the Mirage casino owned by MGM Mirage. The investigation detailed 15,000 required reports went unfilled over an 18 month period. 

The Chairman of the Control Board said in a press release that “as a result of our investigation it doesn’t appear that there was any money-laundering activities”. This investigation highlights the fact that it is probably easier to launder money in a land based casino than on the internet.

(iv) Some Hope for the Future of Regulated Online Gambling in the US.

Not all members of the US Government are keen to outlaw online gambling; Representative John Conyers Jr. has introduced a Bill that calls for the introduction of a commission to examine the regulation of online gambling. 

He has compared the Governments attempt to outlaw online gambling to the events of the 1920s when the Government introduced Prohibition to prevent people from drinking alcohol. He states his view very clearly “just as outlawing alcohol did not work in the 1920s, the current attempts to prohibit online gambling will not work, either”.

The Leach Bill recommends that financial instruments such as credit cards should no longer be allowed to finance online betting accounts, this is a mistake because banks and credit card companies have strict financial controls and record keeping systems which is perfect to combat money laundering. 

These kinds of regulations will force internet gambling underground and create an even larger criminal element in this area. John Conyers Jr. has also highlighted that a regulated online industry would provide an effective tax revenue for the US Government.

(v) Regulation of Online Gambling in the UK:
(a) The Current Position.

In the UK the position regarding online gambling operators is split. Online casinos in the UK are currently illegal, but this will change with the new legislation. Strict anti-money laundering controls will be a feature of the legislation should the Government want to fulfill its goal of making the UK a leading gambling centre.

Bookmakers in general don’t fall within the anti-money laundering controls outlined by the FSA. If reputable, they do however co-operate with various codes of conduct and report suspicious transactions to the National Criminal Intelligence Service’s (NCIS) Economic Crime Unit.

However in 2000 only 16 of the 18,408 reports of suspicious transactions reported were received from betting firms, and they stood accused of not doing enough to combat money laundering. Bookmakers were quick to counter this claim, Ladbrokes’ Sean Boyce stated that they “always notify the NCIS of anything that [they] think is untoward”. In contrast the gaming industry, which covers casinos, were responsible for 300 of the reports to the NCIS.



(b) Proposals for the Future.

It is clear that money laundering is a problem that affects the gambling industry. Under s.6.7 of A Safe Bet For Success it states that “measures will be put in place to prevent all forms of gambling from being used as a conduit for money laundering”. 

There are different ways in which this problem can be tackled as shown above, clearly regulation offers more benefits than prohibition. Adam Bates, Head of KPMG Forensic, has summed up the requirements needed of all involved in gambling industry, “what is needed to fight the global menace of money laundering is a joined up approach in which all investigating and intelligence agencies, regulators, industry bodies and businesses recognise their common interest in making sure that the UK’s high reputation as a financial and business centre remains”. 
PART 9