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Gaming A Target For Money Laundering, But Real Estate Easier Prey

August 3, 2022
The U.S. gaming industry has long been a target for money laundering as criminals look to hide profits, but the problem is not so widespread because there are easier ways to launder money, according to a federal law enforcement official.


The U.S. gaming industry has long been a target for money laundering as criminals look to hide profits, but the problem is not so widespread because there are easier ways to launder money, according to a federal law enforcement official.

“I think it is a general vulnerability and it has special importance when it comes to certain types of criminals,” said John Tobon, special agent in charge for the U.S. Department of Homeland Security Investigations.

“We have seen a lot of involvement between casinos, both in Asia and Las Vegas, and Chinese kleptocrats or Chinese money laundering organizations,” he said during a panel discussion on Monday (August 1) at FinCrime Virtual Week.

Although Tobon did not discuss any ongoing or previous cases, a recent investigation led to a Las Vegas man serving 15 months in prison for helping Chinese gamblers bypass currency conversion limits.

Lei Zhang was sentenced in June 2021 after being accused of collecting cash from U.S.-based third parties, which he used to ensure that high-rollers visiting Las Vegas casinos from China had enough U.S. currency to gamble.

That meant these gamblers were neither limited by China’s rules restricting its nationals from converting more than $50,000 per year from yuan to U.S. dollars nor subject to scrutiny from U.S. banks.

But in terms of routine use, Tobon said, criminal organizations that do not have that familiarity with the gaming industry or are uncomfortable using casinos have many other options, including laundering their money through real-estate transactions.

Real estate remains the leading business sector in the U.S. for laundering of illicit proceeds, according to federal law enforcement agencies.

“It is actually more complex than people make it out to be,” Tobon said. “Laundering money through a casino is not as simple as it used to be; you have to have an infrastructure for it because you still have to get that money into the system.”

Attempted money laundering through casinos can happen in many forms. In some cases, it can be as simple as converting money into chips and playing with them for a short while before cashing out at the casino cage.

Another way to launder money is through the use of individuals using false identification to create multiple accounts to avoid tracing of transactions.

Tobon explained that most criminals never have to go that route because there are so many “easier, straightforward” ways to launder money.

As digital wallets and online gaming become more commonplace, the gaming industry believes these innovative technologies will make it easier to identify and track any potential problems.

“It is no secret that criminals will take any opportunity to exploit new avenues for illicit finance,” said Alex Costello, vice president of government relations with the American Gaming Association (AGA).

Costello told VIXIO GamblingCompliance on Tuesday that the gaming industry continues to “evolve compliance procedures to address new technology and heed off criminal activity.”

“Importantly, these new payment and gaming methods can also make it easier to identify illicit transactions given the digital record that is created,” Costello said.

“As a national leader in AML compliance, the gaming industry always has an eye to the future when it comes to combating money laundering and we will continue to adapt our compliance procedures as we grow.”

Tobon and Lakshmi Kumar, policy director at Global Financial Integrity, discussed who is laundering money and how the United States became a global destination for illicit proceeds during their FinCrime Virtual Week seminar hosted by Certified Financial Crime Specialists.

“The answer to that is everyone is laundering money,” Kumar said.

In terms of who money launderers are, Kumar said “the answer to that is everyone is laundering money,” in part because the U.S. is the world’s largest financial system, “so it attracts the good guys, and it attracts the bad guys because they want the same benefits.”

Those benefits, Kumar told attendees, include “a strong rule of law, great protection of private personal rights, and a strong currency.”

“So these same advantages are the reasons you see criminal actors and oligarchs hiding their money in the U.S. Because like any savvy money person, you want your money to be protected.”

Kumar explained that over the last two decades money laundering was all about the banking industry, which had “no rules, so you could stash your money in a bank account and gather interest for the next ten years.”

“What we are seeing as AML laws have evolved in the U.S. and elsewhere, criminals have diversified the asset classes in which they hide their money,” she said. “But I think the big downside in the U.S … is U.S. laws.”

Kumar said the U.S. was a pioneer when Congress passed the Bank Secrecy Act (BSA) in 1970 as the first laws to combat money laundering in the country, but believes the framework needs to be updated to meet current challenges.

“It hasn’t kept pace with how criminals have evolved money laundering tactics,” Kumar said.

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