The UK Gambling Commission has issued a warning

The UK Gambling Commission has issued a warning regarding the potential for artificial intelligence (AI) deepfakes to be used in money laundering.

 A variety of emergent money laundering and terrorist financing risks that operators will encounter this month, including AI deepfakes and crypto crash games, have been identified by the UK's Gambling Commission.
 Money laundering under the jurisdiction of the Gambling Commission
 Operators are obligated to remain informed about emergent threats in accordance with the terms of their UK licensing, or they may be subject to financial penalties or the revocation of their licence.

 Last month, the regulator imposed penalties on two operators for customer service failures and anti-money laundering (AML) violations.  The Football Pools was ordered to pay £375,000 (€449,732/$484,417) for AML breaches, while Corbett Bookmakers was fined £686,070 for numerous AML failures.

 The UK watchdog has acknowledged that certain remote and non-remote casinos are offering unlicensed money service business (MSB) facilities, including foreign currency exchange, third-party cheque cashing, and the transfer of money in and out of casinos via a third party, in an update to its AML and terrorist financing risks guidance on April 8.

 It also acknowledged that consumers have attempted to deposit substantial amounts of foreign currency.  This encompasses invoices totalling €500.

 "The sale of high-value notes, regardless of currency, poses a substantial risk of money laundering. Therefore, any request to purchase or sell €500 notes or quantities of other high-denomination notes should be considered high-risk," the Commission declared.

 It has also been discovered that individuals are offered money in exchange for their confidential information, which is used by criminals to establish multiple accounts with gambling operators.

 The Commission expressed "concern" regarding the potential for illicit mule accounts to be established through the use of personal information that has been purchased, and the possibility that those who have gained access may be acting as unlicensed wagering intermediaries.

 Money laundering hazards associated with artificial intelligence (AI) and cryptocurrency
 The Commission has stated that artificial intelligence programs and software have become increasingly sophisticated and are now being employed to circumvent due diligence checks.

 In order to facilitate the laundering of money, criminals are employing AI to generate fraudulent documentation, deepfake videos, and face swap images and videos.

 The Commission has mandated that all operators must provide staff training on the evaluation of consumer documentation for AI-generated documents.

 Licensed wagering companies are anticipated to regard exchanges that utilise crypto assets or crypto currencies as high-risk for money laundering.

 The regulator has advised operators to exercise caution regarding reported crypto currency thefts, which could potentially be laundered through wagering platforms.

 It has also stated that its attention has been concentrated on crash games that have been offered in illicit crypto casinos, as well as an increase in interest from licensed operators as a result of their increased popularity.

 "There are apprehensions that products of this nature may enable criminals to conceal the high-risk behaviour of cashing out quickly with limited gameplay within the context of the crash game, and that transactional monitoring controls may not be effective in detecting suspicious activity," the Commission stated.

 Operators have been advised to implement appropriate procedures that can detect suspicious wagering patterns in crash games.

 Warning issued by the Gambling Commission regarding suppliers of illicit goods
 The United Kingdom's authority has acknowledged that games created by operators who possess software licenses are being hosted on unlicensed websites that operate within the country.

 It has reiterated its recommendation that license holders verify that their supplier partners are not affiliated with unlawful websites.  Operators are obligated to promptly "terminate" relationships if they are discovered to have occurred.

 "When such activity is detected, it is imperative that licensees also engage proactively with the Commission, providing details of the preventative measures taken to ensure the activity ceases without delay," the Commission emphasised.

 In the past few months, the regulator has addressed this matter in a variety of public speeches.  Andrew Rhodes, the CEO of the Commission, cautioned operators in a January webinar that they could experience negative consequences if their supplier partners are discovered to be involved in the underground market.

 "At that time, I was perplexed as to why anyone in the licensed industry would desire to engage in business with a company that would be promoting illegal competition," he stated.

 The Commission has issued a warning that casino operators are required to conduct suitable assessments of the risks associated with money laundering and terrorist financing.  Operators are also required to establish controls that are routinely reviewed in order to prevent money laundering.

 Customers who utilise MSB functions should be considered high-risk.  Consequently, they should be subject to more stringent customer due diligence countermeasures.

 The watchdog has also recommended that land-based operators implement closed-loop payment processes, as it discovered that certain operators were employing open-loop payment processes.

 These open-loop payment systems are recognised as a potential source of money laundering, as they enable perpetrators to transfer funds across multiple payment methods.