AGA issues guidelines on mitigating crypto laundering in AML best practises
The association released the guidelines in an effort to safeguard an industry that has dealt with several major money laundering scandals over the last two years.
More than any time since the 2018 PASPA decision, anti-money laundering best practices at the largest casinos on the Las Vegas Strip have come under intense scrutiny.
This year alone, three major casinos reached settlements with the Nevada Gaming Commission to resolve charges related to AML deficiencies at their properties. Ahead of next week’s Global Gaming Expo (G2E) in Las Vegas, the American Gaming Association released a comprehensive guide to best practices for developing a robust AML framework across the gambling industry, not just in Las Vegas.
The association, which represents the $329 billion US casino industry, sponsors the expo each year. G2E annually ranks as one of the largest gambling conferences around the world.
The 64-page guide provides a roadmap for commercial sportsbooks on how to mitigate the widespread risks of money laundering. As gaming transactions through virtual currencies proliferate, the AGA devoted a lengthy section to best practices on combating crypto laundering.
To discourage illegal financial activity and safeguard the integrity of the gaming industry, casinos must develop effective risk-based programmes that ensure compliance with the legal requirements of the Bank Secrecy Act, according to the AGA.
Heightened AML risks through sports betting
The binary outcomes offered through various sports wagers make the bet types a popular vehicle for money launderers, the AGA stated in the memo. As with games such as baccarat, craps and roulette, sports betting gives a customer the option to wager both sides as a way of laundering funds.
For example, if a bettor uses dirty money to wager $100 on a home team, then $100 on the other side, the bettor would only lose the vig, while receiving a clean payout from the casino.
According to the AGA, similar risks may arise when a patron places a bet with a legal sportsbook on behalf of an unidentified third party to conceal the source of funds. In gambling parlance, the practice is known as wagering through a “beard”.
AML best practises have received added scrutiny over the last 24 months in the wake of multiple convictions of illegal Southern California bookmakers during that span. In August, Matt Bowyer received a sentence of approximately one year in federal prison in connection with operating one of the nation’s largest illegal sports betting rings. Bowyer is the bookie who accepted roughly $325 million from Ippei Mizuhara, the former interpreter for baseball star Shohei Ohtani
In Las Vegas, Bowyer laundered millions of dollars through Resorts World Las Vegas. Beside Resorts World, MGM Resorts and Wynn Las Vegas also reached settlements with Nevada regulators this year to resolve AML charges.
In March, the Nevada Gaming Commission approved a $10.5 million settlement with Resorts World, the second-largest in state history. The NGC also levied fines of $5.5 million and $8.5 million against Wynn and MGM Resorts, respectively.
Challenges in enforcing crypto money laundering
Two other bookmakers in the case, Wayne Nix and Damien LeForbes, are awaiting sentencing. LeForbes, a pro poker player, also allegedly laundered millions in a casino purported to be Resorts World. In a 38-page federal plea agreement, prosecutors document a conversation LeForbes had with one of his betting clients.
Concerned that law enforcement might find a way to monitor the transaction, the client sought advice from the bookie. In response, LeForbes instructed the client to structure the payment by sending the debt to several different addresses: “I’d send $100K at a time to different addresses. You can create a different address in a wallet every time. Just don’t send [it] to an exchange.”
Authorities seized two Trezor wallets from LeForbes’ residence during a search on 22 December 2023.
When applying best practices for crypto transactions, the AGA advises that any virtual currency should be converted to US dollars prior to use at a sportsbook. Upon conversion to dollars, the transactions will be subject to the same Suspicious Activity Report reviews as other cash activity within a casino, according to the AGA.
Next week, several panels during the G2E conference will be devoted to AML practices throughout the industry. Compliance officials from MGM, Wynn and Resorts World will appear at a session early next week.
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