FATF issues stark warning as money laundering threat rises with black market presence

By jili tutorial · September 11, 2026

Overview: FATF’s Stark Warning on Gambling and Money Laundering

The Financial Action Task Force (FATF) has issued a new, urgent warning to regulatory bodies worldwide: gambling platforms—both legal and illegal—are increasingly being exploited for money laundering and terrorist financing. This alert comes as regulators, particularly in Europe, revise national frameworks and compliance duties to clamp down on financial crime. The FATF, an intergovernmental body that sets global anti-money laundering (AML) and counter-terrorism financing (CTF) standards, released its latest analysis yesterday, marking its first in-depth study of risks specifically tied to online and illegal gambling.

The report draws on data from over 80 jurisdictions, industry bodies, and researchers over a year-long project. It signals that unlicensed operators now rival or even surpass legal markets in many countries, and that criminal networks are actively using gambling to launder illicit funds. This article expands on the FATF’s key findings, explains why the sector is so vulnerable, and offers a practical guide to the “risk indicators” that authorities and operators should watch for.

Why Gambling Platforms Are Especially Vulnerable to Money Laundering

The Intersection of Technology, Anonymity, and Regulation

Gambling platforms—whether physical casinos, online sportsbooks, or digital poker rooms—offer unique features that attract both legitimate players and money launderers:

High transaction volumes – Large sums of money move quickly, making it hard to spot suspicious activity.
Anonymity – Unlicensed operators often allow deposits via cash, cryptocurrencies, or prepaid cards with minimal identity checks.
Global reach – Players can access platforms from jurisdictions with weak AML laws, creating regulatory gaps.
Blending of legal and illegal play – Legitimate gambling transactions can mask the proceeds of crime.

The FATF explicitly warns that “brick-and-mortar and online casinos and sports betting are considered to be particularly exposed to money laundering risks.” The evolution of technology, combined with varying AML/CTF regulations across jurisdictions, has “led to developments in the money laundering, terrorist financing and, to a somewhat lesser extent, proliferation financing risks associated with the sector.”

The Growing Threat of Unlicensed (Black Market) Operators

A major concern highlighted in the report is the rise of unlicensed gambling platforms. These illegal operators often present themselves as legitimate businesses while offering high levels of anonymity and attractive incentives—both for ordinary consumers and for criminal networks. They typically have multiple deposit methods (including bank transfers, e‑wallets, and virtual assets), making it difficult for authorities to trace the flow of money.

Example: The Tether.bet Case
In the UK, the Labour Party recently called for an investigation into the now‑defunct unlicensed gambling firm Tether.bet. Allegations emerged that George Cottrell, a prominent financial supporter of Reform UK leader Nigel Farage, acted as a “whale” to connect high‑roller VIP UK gamblers with offshore bookmakers. Another firm, Fispay (a UK‑registered financial intermediary owned by Mowbray Jackson), was accused of providing UK bank accounts to Tether.bet customers so they could deposit tens of thousands of pounds. Both Cottrell and Jackson denied the allegations. This case illustrates how unlicensed operators can exploit gaps in regulatory oversight.

Medium Risk for UK Gambling Software Sector

The UK Gambling Commission recently raised the threat level for the country’s gambling software sector from ‘low’ to ‘medium risk’ of money laundering and terrorist financing. This upgrade reflects the growing sophistication of money‑laundering techniques and the increasing presence of illegal operators.

FATF’s New “Risk Indicators”: A Detailed Guide

The FATF’s report includes a list of risk indicators that authorities, financial institutions, and gambling operators should monitor. These signs can help distinguish legitimate play from criminal activity. Below is an expanded explanation of each indicator, with context and real‑world applications.

1. Deposits from Multiple Third‑Party Accounts

What it means: A player’s account receives funds from various unrelated bank accounts, credit cards, or e‑wallets.
Why it’s risky: This method (“layering”) obscures the true source of money, commonly used to launder proceeds from fraud, drug trafficking, or corruption.
Example: A gambler deposits £10,000 using five different bank accounts belonging to different individuals, none of whom are listed as joint account holders.

2. Heavy Reliance on Cash or Virtual Assets (Cryptocurrencies)

What it means: A player predominantly uses cash (at physical casinos) or anonymous cryptocurrencies (e.g., Monero, Bitcoin with mixing services) rather than tracked fiat currencies.
Why it’s risky: Cash and certain virtual assets offer near‑complete anonymity, making it nearly impossible for regulators to follow the money trail.
Example: An online poker site accepts only Bitcoin deposits via a tumbler, and the player never links a verified bank account.

3. Consistent Betting on All Possible Outcomes (Arbitrage Betting with No Risk)

What it means: A bettor places large wagers on every possible result of an event (e.g., Team A wins, Team B wins, draw) ensuring a guaranteed small profit or breakeven.
Why it’s risky: This pattern suggests the primary goal is not winning but moving money through the platform—a classic “smurfing” technique.
Example: On a match between two football teams, a player stakes £5,000 on each outcome at different bookmakers, effectively circulating £15,000 with minimal net loss.

4. Automated Betting Patterns (Bots)

What it means: Bets are placed at regular intervals or in a systematic manner that no human would naturally follow.
Why it’s risky: Bots can be programmed to launder large sums quickly and evade manual detection.
Example: A sportsbook detects that a single account places 200 bets per minute on random low‑stakes events, with an average stake of £100.

5. Repeated Use of VPNs or Proxy Servers

What it means: A player consistently logs in from different IP addresses, often switching countries, to hide their true location.
Why it’s risky: This tactic is used to bypass geolocation restrictions and obscure identity, making it harder for authorities to link the account to a real person.
Example: A gambler in a country with strict AML laws uses a VPN to appear to be in another country where gambling is less regulated.

6. Multiple Accounts Created Using Fake Names or Stolen Identities

What it means: A single individual or criminal network opens several accounts under different names, often with fabricated documents.
Why it’s risky: This enables “smurfing”—breaking large sums into smaller, less suspicious deposits across many accounts.
Example: A ring of money launderers creates 20 accounts at an online casino, each with a different fake ID and deposit limit of £2,000, collectively moving £40,000 per day.

7. Attempts to Bypass Customer Due Diligence (CDD)

What it means: Players resist providing required identification documents, such as passports or utility bills, or provide obviously fraudulent documents.
Why it’s risky: Legitimate players comply with CDD; those with criminal intent try to avoid it.
Example: A high‑value player refuses to upload a selfie with their ID and instead sends a blurred scan of an expired passport.

Regulatory Challenges and the Need for Harmonization

Why Unified EU Gambling Rules Are Unlikely

The FATF’s report underscores that one of the biggest obstacles to combating money laundering in gambling is the fragmented regulatory landscape. While unifying gambling regulations across the European Union has been discussed, it remains highly unlikely due to stark differences in national laws, taxation rates, and cultural attitudes toward gambling.

Example: Malta has generous tax incentives and a light regulatory touch to attract online gambling operators, while Sweden imposes strict licensing conditions and high taxes. Criminal operators exploit these disparities by basing in the weakest jurisdiction.

The Role of International Cooperation

The FATF urges governments to:

Strengthen oversight – Build capacity to supervise both licensed and unlicensed operators.
Crack down on illegal and offshore operators – Use cross‑border law enforcement and asset‑freezing powers.
Boost international cooperation – Share intelligence on suspicious transactions and operators.
Deepen public‑private collaboration – Work with fintechs, banks, and gambling industry associations to develop real‑time monitoring tools.

FATF President’s Call to Action

Giles Thomson, FATF President, stated:

“Without robust safeguards, these sectors can be attractive gateways for fraudsters, professional money launderers and organised criminal networks. I urge all governments to take note of the risk indicators we have set out today, and put in place appropriate risk‑based responses – from strengthening oversight and cracking down on illegal and offshore operators, to boosting international co‑operation, and deepening public‑private collaboration.”

Practical Steps for Regulators and Operators

Based on the FATF report, here are actionable recommendations for national authorities, gambling regulators, and licensed operators:

For Regulators

Adopt the FATF risk indicators into national AML/CTF guidelines.
Increase inspections of high‑risk operators, especially those accepting cryptocurrencies.
Create a blacklist of unlicensed platforms and share it with payment intermediaries like banks and e‑wallets.
Impose fines on operators that fail to conduct adequate Customer Due Diligence.

For Licensed Operators

Implement biometric verification for all account openings (e.g., liveness checks via video).
Monitor betting patterns for automated or “all‑outcomes” betting and flag accounts.
Limit deposit methods to those with clear audit trails (e.g., bank transfers, verified e‑wallets).
Train staff to recognize smurfing and third‑party funding.

Conclusion: The Imperative of Action

The threat posed by illegal gambling operators and their use for money laundering and terrorist financing is not static—it is rising as technology evolves. The FATF’s first‑ever detailed examination of online and illegal gambling risks provides a clear roadmap: governments must act now to strengthen oversight, adopt the recommended risk indicators, and close the gaps that allow criminal networks to flourish.

Without swift and coordinated action, the black market will continue to grow, offering a near‑untraceable channel for laundering billions of dollars. The FATF’s warning is stark, but it also offers hope: with the right tools and collaboration, the fight against financial crime in gambling can be won.