How Big Was Gambling Fraud & Laundering In The Past?
In the modern era of gambling, there are countless different checks in place in order to attempt to stop money laundering and fraud. From Know Your Customer schemes that betting companies have to carry out through to the need to prove where your funds have come from any time you deposit funds into your betting account, it is clear that major steps have been taken to stop nefarious types from engaging in illegal activity. The question is, has it always been a major problem for the betting industry or is it a relatively new thing?
The truth, of course, is that people have always tried to pull the wool over the eyes of betting companies and casinos in order to win money, such is the allure of riches promised by gambling. What is much more difficult to spot is whether or not it has actually increased in recent times or whether the manner of the ‘cheating’ has just changed shape. Fraud still exists today, it’s just that the manner in which it is carried out is much more subtle than it was in the past and is carried out in entirely different ways, moving with the times.
What Is Money Laundering & Fraud?
The world of betting has long been primed for fraud and scandal. In 1919, for example, the Chicago White Sox threw the World Series, with numerous members of the playing squad receiving money for doing so. Similar stories can be found around the world and across countless different sports, with match-fixing and similar frauds causing all sorts of problems for betting companies. Whether or not that counts as ‘fraud’ is a matter of opinion, but certainly there is something fraudulent about teams or players ensuring bets will be winners or losers.
Part of the reason discovering past examples of money laundering is difficult is that it is a complex process that is designed to cover up the original source of money that has been gained illegally. It is a serious offence, which can lead to people going to prison as well as facing fines. There are three stages to money laundering, starting with accumulating the money that will be laundered via illegal means. Next, that money gets placed into a financial system, in the case that we’re looking at being with gambling firms or casinos.
The money then needs to be withdrawn when it has been ‘cleaned’, with many people that engage in laundering happy to lose some of their money in the process. A good example of it would come in the form of a drug dealer taking their money to a casino, exchanging it for chips and placing bets with odds of Evens or better. They will be aware that they will lose some bets, but as long as they win 95% of them on average they will then be able to exchange the chips for ‘clean’ money that they can then spend to their heart’s content.
It Became Big In The 1980s
The commonality of money laundering as well as fraud in the world of betting during the 1980s meant that something had to be done. It wasn’t just in terms of betting that money laundering in particular was a major issue, of course. Yet as that is what we’re concerned with here, it is obviously why we’re focussed on it. On a global scale, money laundering needed to be dealt with, with each country having their own approach to dealing with it. The best way of stopping it from being an issue was to create an organised response.
In 1989, the G7 countries decided to form the Financial Task Force on Money Laundering. The intergovernmental body was designed specifically to combat money laundering on a global scale. The body’s remit was expanded in 2001 to include financial terrorism and it’s obviously worth pointing out that it wasn’t just focussed on money laundering associated with gambling. Over the years, the body came up with 40 recommendations specifically regarding money laundering, all of which was necessary because of how common money laundering and fraud had become in the 1980s.
Modern Problems
The modern world is such that betting companies regularly need to find ways to ensure that customers are not engaging in fraud or money laundering. The first of these issues tends to be dealt with thanks to the Know Your Customer scheme, which ensures that everyone that has a betting account has proven that they are who they say they are. This is why you need to do things such as provide a betting company with information about where you live, as well as give them numerous different forms of identity documents like your driving licence, passport and a recent bill from a recognisable company.
In terms of money laundering, betting companies need to be given information on where you have got your money from. This is less of an issue for people that only bet in small sums, but is much more of a problem for people that like to bet huge amounts of money. If you tend to only place small bets and then suddenly place a large deposit into your account, the chances are high that a bookmaker or online casino will be in touch to ask you where that money has come from, including getting you to provide them with a proof of funds.
Companies that fail in their responsibilities will often be fined by the United Kingdom Betting Commission, such as was experienced by William Hill in 2018. The problem is, the development in technology means that it is much harder for the UKGC and the various betting companies to identify people that are acting fraudulently or laundering money. In the past, people would physically have to go to a casino or bookmaker, meaning that they were much easier to identify. Most things being done online means that this is no longer the case, which is why the Gambling Commission puts the responsibility on betting companies.
