The Dark Side of Casinos - Part 2

Winnings

Winnings serve as the easiest way to use black money in gambling in order to obtain a legitimate income. It is just necessary to play the slot machines or participate in other games that require small fees but provide high chances to win. It remains only to wait for the victory, receive a cheque, and cash this cheque.

The Purchase of Winnings from Successful Players

Parallel Bets

Parallel bets are usually used in games with low wagers and low risks of losing money, such as roulette. Two or more fraudsters take part in the game. They make opposite bets of the same amount. For example, the player A wagers $1,000 on red, and the player B stakes $1,000 on black. The player B can also wager $60 on zero just for insurance, although this bet is often lost. If one of the players wins, the bet is doubled and the second wager is lost. After that, the winner will receive about $2,000 that he or she can get in the form of a cheque.

There is a network of 33 thousand betting terminals called FOBT (fixed odds betting terminal) in the United Kingdom. They are located in the special betting shops. Technically, they are slot machines that are set up to allow playing one of the casino games (it is usually roulette.) This is a favorite place of English criminals for money laundering. Owners of betting shops are well aware that among the players there are criminals, drug dealers, representatives of criminal structures, but it is difficult to find them. The standard betting scheme of fraudsters looks in this way: they wager 20 pounds on red and black, and 2 pounds on zero. To be sure, this scheme is unprofitable, but over the long run roughly 5-10 percent of the total amount of laundered money is lost. This is a very good percentage, since all criminal structures usually spend at least 25-40 percent for money laundering. It is even acceptable to lose half of proceeds to make them legal.

Investigations in Spain that are primarily related to drug trafficking, corruption, and tax evasion, showed that fraudsters had used gambling to launder money. The method implied the purchase of winning lottery tickets from casino customers.

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The group of non-residents bought up jackpots from other players in various gambling clubs in Sydney, Australia. During the year, the suspects deposited 1.7 million Australian dollars in the form of winning cheques. Then they immediately withdrew funds in cash. To be sure, the funds that were used to purchase winning jackpots were illegal.

Indicators of Money Laundering Using Winnings

• The frequent winnings of jackpots by the same player.
• The frequent cases of deposit formation using winning cheques. Then the funds in the form of cash are immediately withdrawn.
• Customers are present near the sites where the jackpots are paid out, but they don't participate in gambling.
• Numerous cases of redeeming chips for cash per day.
• Customers inform about the release of deposited funds or payouts with jackpots by slot machines.
• The purchase and exchange of chips for cash without the participation in gambling.
• The request to split a winning, forming a certain amount of cash and chips. These amounts don't reach the minimum financial reporting requirements.
• The frequent operations of redeeming chips for cash, which are inconsistent with the purchase of chips.
• Winnings that consist of chips, cheques, and cash are redeemed for cash.

Cash Exchange

Taking into consideration the popularity of casino tours and the desire of clients to attend legal casinos, most casinos offer currency exchange services. The criminals who are involved in drug trade often use casino services to exchange currency in order to exchange criminal proceeds from one currency to another to change the origin of money. Individuals and groups of them also use structuring methods to exchange currency with the help of operations whose amounts don't reach the minimum financial reporting requirements. They make operations in different casinos and after the exchange they gather together all amounts, forming the entire sum.

Exchange of Huge Amounts of Currency

The Participation in Casino Games to Exchange Currency

Sometimes fraudsters take part in gambling games only to exchange currency. At some casino customers can buy chips only for foreign currency, for example, in Nepal, customers purchase chips for US dollars and Indian rupees.

The group of non-residents of Spain visited separately one Spanish casino to buy chips for Swiss francs. The purpose of this criminal group was to redeem chips for Euro. The casino security service noticed these operations, ceased them, and notified the police of this crime.

Indicators of Money Laundering Using Currency Exchange:

• Bank cheques are redeemed for cash.
• Frequent currency exchange operations.
• A significant or sharp increase in the volume and frequency of currency exchange operations by account holders.
• Currency exchanges without reasonable explanations.
• Customers change small-denominations banknotes to high-denomination bills.
• The third parties exchange currency.
• Unknown customers frequently exchange huge amounts of currency.
• Customers who rarely gamble or don't gamble at all exchange currency.

The Collaboration of Casino Employees

The involvement of casino employees is a very convenient way for fraudsters. Workers or their organized groups, which include employees from different departments of the casino, collaborate with clients to cheat the casino and prevent the exposure of fraud.

The following methods can be used:

• Employees don't make reports about suspicious operations that reach the minimum financial reporting requirements.
• The elimination of documents and reports about the operations, which are related to the audit or reporting process.
• The falsification of a player's rating and other records in order to justify the accumulation of chips or credits in slot machines.

Some casinos have found weaknesses of suppliers of gaming equipment and slot machines, as well as some contractors who supply casinos with products and may influence the transparency of operations. Criminals may try to use the gambling equipment and computer systems associated with it to commit theft and launder money in casinos.

A former employee of the casino was noticed by the investigating authorities of Australia when he was buying a house, paying for it by cash. There were suspicions that the family of the man had been involved in drug trafficking. The funds were provided by his family. However this man could show his rating at another casino to prove that he was able to earn over 400,000 Australian dollars for two weeks with the help of 20,000 Australian dollars. There are suspicions that an accomplice from the second casino falsified this rating, but it's impossible to verify this fact.

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In Florida, the income from drug trafficking was laundered using slot machines. Some slot machines are controlled by software that has the back door effect, i.e. the employees of casinos are able to regulate the payout percentage. In Florida, drug dealers bribed the casino staff, who had access to slot machines. These employees set up a number of video slots, so that players could frequently win jackpots.

Indicators of the Involvement of Casino Employees:

• The connection between regular customers and casino staff beyond the casino.
• The possible winnings do not correspond to the records about them.
• A sharp increase in the volume and frequency of cash transactions by regular account holders.
• Huge cash amounts from unknown sources.
• Transactions are made not by the account holder.
• Funds are deposited using different methods.
• Cheques are drawn on the relatives of the player.
• Many individuals transfer money to one recipient.
• The third party reports on the transactions but did not actually participate in the operation.
• Money is transferred to the accounts of third parties.
• The use of third parties to commit electronic transfers.
• The use of third parties to deposit huge amounts of money.
• The use of accountants and lawyers to make transactions.
• Customers commit opposite operations, transfer funds abroad, and then they are returned to their accounts.
• The use of money transfer agents for cross-border transactions.
• The use of third parties to buy chips.
• The use of third parties to make bets.
• Electronic funds transfer in countries without taxation.
• Casino tours, where the funds can be hidden by the formation of their pool.
• The transfer of funds to the third party after the exchange of chips for cash.

Credit/debit cards

Casinos in some countries allow customers to buy chips using credit cards. If cards are not stolen or obtained by fraud, the negative balance on the credit card is compensated for by the cardholder using illegal methods. However the use of credit cards by criminals allows investigating authorities to monitor the movement of funds more accurately.

Debit cards provide another method that is used by fraudsters. The following example describes how the criminals enter the casino and use their debit cards to purchase chips spending the maximum permitted amount. Criminals usually don't wager at all or make the smallest bets. Then the criminals redeem chips for cash. In such cases, these chips are given to the assistant. Sometimes the entire amount is used for gambling. Major casino operators have already revealed this trend and used mechanisms that allow them to limit operations with debit cards in the situations with a high risk of money laundering.

One Eastern European guy, who resides in Belgium, visited twice a casino on the Belgian coast and bought chips for 400,000 euros, paying by cash and by credit card. Casino sent a report about his transactions. Based on the history of the purchase of casino chips with credit cards, it was found that his account was extremely active: it included various transactions from different companies and operations concerning the formation of cash deposits. The wife of the suspect was involved in the business activities in Belgium and communicated with representatives of organized crime from Central and Eastern Europe. The suspect personally received visitors from these countries at home, and financial transactions were carried out in cash.

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A regular customer of one of the British casinos attracted new clients from time to time. It became suspicious when new customers started conducting transactions with debit cards at the maximum available amount. They received casino tokens, which then were transferred to the initial customer. Most new customers have never visited this casino again after their initial appearance there. New customers were of different nationalities, but it was supposed that all of them came from abroad. The amount of transactions ranged from 1,000 to 7,000 pounds. This money was in part used for gambling. A certain sum was lost by the initial customer.

Indicators of Money Laundering Using Credit/Debit Cards:

• The purchase of chips using credit cards.
• The purchase of chips using debit cards.
• The purchase and exchange of casino chips for cash without participating in gambling.
• The customer casino chips and leaves the casino shortly afterwards.
• The use of a stolen or illegally obtained credit card.
• The use of numerous credit/debit cards to purchase chips.
• The use of third parties to buy chips using credit/debit cards.
• Structuring of transactions with credit cards.
• The customer reaches upper limits while conducting transactions with the help of credit cards.
• The amount of operations relating to the exchange of chips for cash is almost equal to the sum of operations concerning the purchase of chips.
• The problems that may arise during the verification of a customer: refusal, fake documents, one-time documents, and tourists.

Fake Documents

As in the case of financial establishments, fraudsters use fake documents in order to disguise the origin of criminal assets and protect those who are involved in money laundering. Fake documents are often used to conduct financial transactions at casinos, open an account, make operations, and receive winnings.

A member of the criminal organization involved in drug trade used both money received as a payment for his activities and large sums given to him in order to launder funds. He reached the level of the high roller who wagered large amounts. This player usually hired the third parties in casinos for the purchase of chips for cash, paying them insignificant amounts of money for that. Then he redeemed a certain number of chips purchased by the third party for cash and said that it was his winnings. According to the report on the casino financial operations, the discrepancy of 313,000 dollars between operations of the purchase of chips and operations concerning their exchange for cash was found. Twenty-four reports about operations with cash indicated the fact that he had used the fake name and numerous Social Security numbers. It was also mentioned in many reports that he had refused to provide his Social Security number.

Indicators of Money Laundering Using False Documents and Counterfeit Currency:

• The customer buys chips or makes operations with cash, leaving the casino shortly afterwards.
• The client transfers funds to the accounts of third parties.
• The customer uses numerous names for such activities.
• The customer uses modified, stolen, or illegally obtained identity documents to hide his true identity.
• The problems that may arise during the verification of a customer: refusal, fake documents, one-time documents, and tourists.
• The discrepancy of provided identity documents.
• The customer refuses to provide identity documents or shows fake documents.