The American Gaming Association (AGA) recently released a comprehensive Anti-Money Laundering (AML) Best Practices Guide, specifically addressing the risks of cryptocurrency money laundering with detailed prevention and control recommendations. This 64-page guide aims to help commercial sports betting companies establish an effective anti-money laundering framework, reducing the growing risk of money laundering, especially in the context of the surge in virtual currency gambling transactions. The release of the guide coincides with the eve of the opening of the Global Gaming Expo (G2E) in Las Vegas, reflecting the industry's increasing emphasis on compliance and risk management.
Background and Purpose of the Guide
The American Gaming Association (AGA), representing the $329 billion U.S. gaming industry, recently released a comprehensive Anti-Money Laundering Best Practices Guide. The guide aims to help the industry establish a robust anti-money laundering framework to address increasingly complex money laundering risks.
The release of the guide comes at a time when the gaming industry is facing strict anti-money laundering scrutiny. Just this year, three major casinos reached settlements with the Nevada Gaming Commission to resolve allegations related to their anti-money laundering deficiencies, showing increased regulatory pressure.
Contents and Key Areas of the Guide
This 64-page guide provides commercial sports betting companies with a detailed roadmap to reduce money laundering risks. The guide particularly focuses on the new challenges brought by the surge in virtual currency gambling transactions, devoting a significant portion to best practices for combating cryptocurrency money laundering.
The guide emphasizes that to prevent illegal financial activities and maintain the integrity of the gaming industry, casinos must develop effective risk-based plans to ensure compliance with the Bank Secrecy Act's legal requirements. These measures are crucial for protecting the industry's reputation and maintaining operational licenses.
Risks of Money Laundering in Sports Betting
The American Gaming Association points out in the guide that sports betting, with its binary outcomes, makes it a popular tool for money launderers. Similar to games like baccarat, dice, and roulette, sports betting allows customers to bet on both sides simultaneously, providing a possibility for money laundering.
For example, a gambler uses illegal funds to bet $100 on one side and $100 on the other, ultimately only losing the commission but receiving "clean" payouts from the casino. This mode of operation makes money laundering activities difficult to detect and track.
Representative Cases and Law Enforcement Actions
In the past 24 months, several illegal gambling companies in Southern California have been convicted, prompting stricter scrutiny of anti-money laundering best practices. In August this year, Matt Bower was sentenced to about one year of federal imprisonment for operating one of the largest illegal sports betting groups in the U.S.
In Las Vegas, Bower laundered millions of dollars through Resorts World Las Vegas. Besides Resorts World, MGM Resorts and Wynn Las Vegas also reached settlements with Nevada regulatory authorities this year to resolve anti-money laundering allegations.
Challenges of Cryptocurrency Money Laundering
The guide particularly emphasizes the new challenges of cryptocurrency money laundering. In representative cases, gambling company owners instructed clients to send debts to multiple different addresses to construct a payment mechanism, avoiding law enforcement monitoring of transactions.
In December 2023, authorities seized two Trezor wallets at the residence of a suspect, showing the increasing use of cryptocurrencies in illegal financial activities. This new form of money laundering poses a severe challenge to traditional monitoring methods.
Regulatory Penalties and Compliance Costs
In March this year, the Nevada Gaming Commission approved a $10.5 million settlement agreement with Resorts World, the second-largest settlement in the state's history. The Commission also imposed fines of $5.5 million and $8.5 million on Wynn and MGM Resorts, respectively.
These hefty penalties indicate that regulatory authorities have a zero-tolerance attitude towards anti-money laundering violations. The significant increase in compliance costs prompts operators to pay more attention to the construction and improvement of anti-money laundering frameworks.
Cryptocurrency Handling Recommendations
Addressing cryptocurrency risks, the AGA recommends that any virtual currency should be converted to U.S. dollars before being used for sports betting. Once converted to dollars, such transactions will undergo suspicious activity report reviews like other cash activities.
This recommendation aims to make cryptocurrency transactions more transparent and traceable, reducing the space for money laundering and illegal financial activities. By standardizing processing procedures, the overall industry's risk prevention capabilities are enhanced.
G2E Conference and Industry Exchange
The G2E Expo next week will host multiple panel discussions specifically exploring anti-money laundering practices across the industry. Compliance officers from MGM, Wynn, and Resorts World will share experiences and insights during the conference.
These discussions will provide a platform for industry exchange, helping operators understand the latest regulatory requirements and technological developments, collectively enhancing the effectiveness and efficiency of anti-money laundering efforts.
Industry Impact and Implementation Significance
The release of the AGA guide marks a new height in the gaming industry's emphasis on anti-money laundering efforts. As the use of virtual currencies increases and money laundering techniques evolve, the industry needs to continuously update and improve its control measures.
The implementation of the guide will help operators establish a more robust risk management system, protect the industry from illegal financial activities, and maintain the integrity and stability of the gaming market.
