Behind the Scenes: How Payment Processors Drive Illegal Online Gambling Operations

Payment Processors and the Gambling Industry

Updated February 3, 2024: We have removed the FCA-regulated payment institution Volt from the list of payment facilitators for online casinos and gambling platforms. According to their lawyers, Simmons & Simmons (website), Volt’s technology and brand are used by online casino operators, but Volt itself denies direct involvement. This matter remains under investigation, and separate reports on Volt have been prepared.

Recent analysis of the online gambling sector highlights a troubling trend where regulated and unregulated payment processors inadvertently facilitate unauthorized and illegal gambling operations. FinCrime Observer’s report sheds light on these practices, emphasizing the critical need for compliance and due diligence among payment facilitators.

The UK Regulatory Landscape

2023 Gambling Act White Paper

The UK has introduced significant reforms to regulate online gambling, focusing on consumer protection in the digital age. Key measures outlined in the 2023 Gambling Act White Paper include:

1. Enhanced Consumer Safeguards:
   • Frictionless player protection checks.
   • Stricter rules to prevent harm from bonus offers.
2. Increased Regulatory Oversight:
   • Expanded powers for the Gambling Commission to combat black market operators.
   • Creation of an industry ombudsman for dispute resolution.
3. Statutory Gambling Levy:
   • Mandatory operator contributions to fund treatment and education for gambling-related harm.
   • Replacement of the inadequate voluntary system.

These reforms represent the most comprehensive changes since the Gambling Act of 2005. Read more about the UK’s regulatory framework here.

The EU Regulatory Approach

Varying National Standards

The European Union lacks a unified regulatory framework for online gambling, requiring operators to comply with specific national regulations in each member state. Key points include:

1. Advertising Restrictions:
   • Tighter controls on gambling advertisements.
   • Implementation of stake limits.
2. Local Licenses:
   • Operators must hold licenses issued by national regulatory authorities.
   • A Curacao license does not grant blanket authorization across the EU.
3. Player Protection Measures:
   • Increased emphasis on affordability checks.
   • Efforts to mitigate gambling-related harm.

The Curacao License Dilemma

A Curacao license is insufficient for legal operations in the UK or EU. Specific requirements include:

1. UK Licensing:
   • Businesses must obtain a remote gambling license from the UK Gambling Commission.
   • Adherence to strict anti-money laundering (AML) and player protection standards.
2. EU Compliance:
   • Operators must navigate each member state’s regulations.
   • Licenses are subject to review, suspension, or revocation for non-compliance.

High-Risk Payment Processors

Payment processors serving online casinos and gambling operators face significant scrutiny under EU and UK money laundering laws. These entities must:

1. Conduct thorough due diligence on clients.
2. Monitor transactions for suspicious activities.
3. Report suspicious activities to relevant authorities.

Key Payment Processors:

Call for Information

If you have information regarding illegal online gambling schemes or their payment facilitators, please report it via our whistleblower platform, Whistle42. Your insights are crucial to exposing unethical practices and ensuring accountability in the gambling and payment processing industries.