This week Reuters News Agency has released an eye-opening report on how money is laundered for Americans who play at online casinos. Online gambling has been illegal in the USA since 2006, which would probably come as a big surprise to most Americans and even most gamblers since for the most part, all online casinos advertise to, and accept business from the United States, who leads the world by a large amount on the total amount gambled online.
There are varying opinions on why online gambling is so easy in the USA, despite being illegal. One theory is that the bill was passed and signed by a President who became very unpopular and the fact that the bill was passed in a very obscure way without a lot of vocal support or attention. Furthermore, the FBI and Justice Dept seem to be really not interested in pursuing cases against individuals who gamble online nor against the hundreds of online casinos that spring up now and then.
Reuters however, did the legwork and did what most law enforcement does, follow the money. In the case of online gambling and payment transactions, gambling transactions are instantly flagged by banks, and that information is passed to authorities. However, in a very simple, almost amateur form of money laundering, the online casinos have used credit card processors who are located in Europe and who each have shell companies who supposedly sell normal items. The credit card processors are then funneling the transfers through the shell companies and so the transactions are not flagged as gambling. For instance, one of the shell companies was an online company that sold fabrics in bulk amounts. So when a person from the USA was adding money to their casino account using a credit card, instead that transaction would have all the coding in a way to make it appear that they were buying fabric from Germany.
Reuters identified almost a dozen of these shell companies, and at none of them could a person go through the website and make a purchase and have the expected item delivered. In some cases, the money was just taken, and after a complain the money was refunded, and in other cases, the money was refunded instantly with a message that the product was not currently available. Shortly after the Reuters report, all of the businesses stopped processing for casinos. It is pretty obvious that other shell companies were quickly set up to handle the same purpose, remove the gambling code from the credit card orders.