The Royal United Services Institute (RUSI) is a leading defense and security think tank that has issued an urgent call for governments and regulatory bodies around the world to establish closer ties with cryptocurrency exchanges and service providers. This collaboration aims to strengthen regulation and mitigate the significant threats facing the global casino industry, particularly from criminals using digital currencies.
RUSI's report "North Korea's Activities in the Casino and Gambling Sector: How Should Jurisdictions Respond?" highlights a major issue of North Korea's earnings through the casino industry (especially using cryptocurrencies) being utilized by criminals. The report emphasizes the complex strategies used by criminals and state actors to circumvent regulatory oversight in certain casino and gambling operations, with the burgeoning cryptocurrency market exacerbating this situation.
The official report from the Royal United Services Institute (RUSI) details how criminals exploit less regulated aspects of the casino and gambling industry to launder money and transfer illegal assets across borders. The emergence of cryptocurrencies has intensified this problem, providing new methods to obscure the origins of criminal funds. "Criminals exploit the regulatory deficiencies in the casino and gambling industry to launder money and transfer illegal assets across borders. Cryptocurrencies are reported to be used as a means to transfer and conceal criminal assets, further intensifying this threat," the report explains.
Vulnerabilities and Regulatory Gaps
According to the Asia Gambling Brief, the presence of casino intermediaries is also seen as a particular vulnerability, with operators increasingly accepting and transferring cross-border funds via cryptocurrencies. Some of these crypto platforms are developed by or linked to North Korean interest groups. The report criticizes the current monitoring systems in both physical and online gambling industries, highlighting significant gaps in effective cryptocurrency legislation and management to mitigate financing risks.
However, the report also acknowledges cryptocurrencies as potential assets within the regulatory framework, offering unique opportunities for tracking and monitoring transactions through blockchain analysis. This could change the way investigations into intermediary operations and other casino activities are conducted, moving away from the untraceable nature of cash transactions.
Recommendations for Strengthening Crypto Regulation in the Gaming Sector
RUSI advocates for the implementation of strict licensing conditions in any jurisdiction where cryptocurrency transactions related to gaming occur. It calls for governments and regulatory bodies to establish precise controls over the use of cryptocurrencies within the gaming industry, which may include specifying permitted types of digital currencies and setting transaction limits.
The report underscores the transformative impact of cryptocurrencies and insists on an international cooperative approach involving cryptocurrency exchanges, the casino industry, and blockchain analysis companies. This partnership is crucial for effectively curbing the potential for North Korean entities and other illegal actors to misuse casinos, thereby hindering their ability to use proceeds for activities such as mass destruction weapons programs.
