Eu FLag
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No101022004

Online gambling enables money laundering – TRACE offers a solution

Online gambling is a growing market worth around USD 53.7 billion a year, but it also poses significant risks for financial crime, including money laundering, fraud and terrorism financing. 

The problem of online gambling has been transformed by the advent of smartphones, with the temptation to gamble now everywhere in society. The UK government has introduced a gambling White Paper for the digital age (High stakes: gambling reform for the digital age), which proposes a reform blueprint covering six key areas. The proposals draw on knowledge and evidence gathered from over 16,000 submissions received in response to a call for evidence. The government aims to tackle some of the unique challenges of online gambling. 

The virtual nature of products, cash flows, payment processes, heterogenous legal frameworks, and high payout rates make online gambling an excellent avenue for financial crimes. Criminals can launder funds through online gambling as a few bets can give a convincing veneer of legitimacy, making it harder to detect.

The sources of online gambling are often based in tax-friendly legal jurisdictions, such as Malta. There are very few qualified specialists in this area, making it challenging for law enforcement agencies to investigate and gather evidence. Without the AI-based analytical tools available to law enforcement agencies (LEAs), mapping the connections between individuals and transactions can be an onerous task.

The TRACE project, led by Professor Umut Turksen will address these challenges. 

Research findings suggest a pressing need for international cooperation to establish harmonised legal frameworks that can help combat money laundering in online gambling. Law enforcement agencies must leverage automated tools to identify and disrupt these illegal activities.

TRACE offers assistance at various stages of the investigation. With its AI technology, TRACE will help to find and evidence information from the web and social media platforms. TRACE can identify the online gambling platforms used by the suspects, locate them, and look for the ultimate beneficial ownership network behind them.

The organisations CIN, Proflow and Aston University lead work relating to the LEA requirements for gathering data and evidence collection, including in the case of online gambling. In our research projects (DeFi Regulation in the EU: should we act now? – TRACE (trace-illicit-money-flows.eu)), we have identified a number of blindspots for law enforcement, creating opportunities for cybercriminals to exploit current heterogeneous compliance with frameworks for online gambling and fragmentation of the cyberspace. 

Professor Vladlena Benson notes that the new online Gambling act review at the Houses of Commons is timely, and that TRACE partners are pleased to contribute to the academic debate in this area.  

TRACE can add the personal and financial information of identified actors to a case file and crawl the web to find more information and complement the knowledge base for a case. Within TRACE, a knowledge graph is designed based on the requirements analysis conducted by the Aston research team. This will provide forensic evidence about the transactions between suspicious bank accounts and online gambling platforms. The Crowd Knowledge Graph can be fed with this collected information to improve the visualisations and maps of networks, money flows, asset transactions etc.

TRACE will help law enforcement agencies investigate and gather evidence related to money laundering and financial crimes in the online gambling industry, ultimately contributing to making the industry safer and more transparent.

Authors: Bogdan Adamyk and Vladlena Benson, Aston University