Money Laundering Crime: How Vulnerable is the Gaming Industry?

Written By:

Hala Bou Alwan, CEO & Founder, Hala Bou Alwan Consultancy

With the evolution of the gaming industry, exposure to financial crimes is rapidly increasing. Money Laundering and Terrorist Financing are two of the critical risks facing the gaming industry, but other threats need consideration across a rapidly evolving gaming industry, including fraud, bribery, corruption, child exploitation and modern slavery. Further to these risks, today’s high-tech environment presents cybersecurity and data protection risks.

Operators and regulators need mechanisms to protect themselves from these threats and their potential for criminal activity with negative consumer and corporate impact.


Is Gaming a high-risk industry?

Yes. The main reason is that in many countries it is still unregulated, hence criminals flock towards avenues with little or no regulation. The video game industry has witnessed much criminal activity in recent years due to its unregulated status and few, if any, Know Your Customer (KYC) rules, ease of transfer of in-game currency, and crowded platforms that allow criminal transactions to occur in plain sight.


Cybercrime related to gaming has traditionally focused on DNS attacks and the theft of login details of accounts which is part of a larger crime: Money laundering.


Gaming industry & Anti-Money Laundering (AML) regulations:


In 2009, the Financial Action Task Force (FATF) issued a detailed report on the vulnerability of the casino and gaming sector. In June 2019, FATF added an interpretive note to Recommendation 15 in relation to virtual asset activities and service providers, particularly related to Money Laundering and Terrorist Financing. The note puts forth approaches to regulating and supervising virtual asset service providers (VASPs). A video game company that sells virtual currencies may be considered a VASP. Then, in July 2020, FATF issued a report on the revised standards on virtual assets and virtual asset service. FATF has agreed to continue its focus on virtual assets and undertake several actions to mitigate Money laundering & Terrorist financing.


Some might say that in-game items are not intended to be traded or sold on unauthorised third-party websites, and that game developers shouldn’t bear the burden of AML/CTF regulation. However, the answer is that everyone should.


As money laundering threats continue to grow across online games, all regulators should work at a national and international level to fight these crimes, changing the image and reputation of an unregulated gaming industry into a strict AML-compliant industry, similar to any other industry applying these measures, and in some instances, in a stronger way.

To become compliant, where should the industry start?


The gaming industry should implement self-assessment to identify any gaps they have, which make them vulnerable to these crimes. They should define whether these gaps are because of a lack of training and awareness, and implement new technologies and AI systems to help operators do a more thorough job of identifying their patrons and have the right mechanisms for preventing, detecting, and monitoring transactions while operating across borders without opening themselves up to greater threats from these crimes.


Gaming companies, like any other business, have a responsibility to keep Money Laundering and Terrorist Financing out of their operations. After analysing the results of the self-risk assessment, they should design and implement a comprehensive compliance programme to prevent money laundering. This should not only be a legal requirement but a culture and mindset.

The minimum measure to be taken after conducting a clear risk assessment is a structured, risk-based approach following the below key steps:


  • Customer Due Diligence (“CDD”): in higher risk areas, enhanced due diligence is needed

  • Identifying the politically exposed persons: PEPs and approaching stricter due diligence for the KYC & monitoring mechanism

  • Ultimate beneficial ownership: must always be defined

  • Transaction screening & monitoring

  • Sanctions screening


With so many cases proving that criminals are constantly finding ways to target the online gaming sector to facilitate Money Laundering - hence making this industry a vulnerable one - the gaming industry should, in turn, be proactive and not reactive in finding ways to protect itself now and in the future.

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