Canada Concerned About Links Between Online Gambling and Drug Trade

Recent investigations uncovered that online casinos were one of the easiest means to launder drug money, necessitating tighter control and increased vigilanceImage Source: Shutterstock.com

Canada’s financial intelligence agency, FINTRAC (Financial Transactions and Reports Analysis Centre of Canada), has raised alarms over the suspected use of online gambling platformsfor laundering proceeds fromfentanyl production and trafficking. The revelation underlines an uncomfortable link between the online gaming industry and the opioid crisis that has gripped Canada over the last few years.

Payment Processors Can Obscure Illicit Proceeds

FINTRAC believes many digital gambling platforms are used as tools toobscure illicit funds from fentanyl trafficking. Known individuals involved in the drug trade have reportedly made significant depositsin online casinos, later withdrawing funds from payment processors in Canada, Malta, and the United Kingdomand disguising these proceeds as gambling winnings.

What bothers investigators, though, is how such activities mask the origins of the funds involved. Using payment processors means these transactionsappear legitimateto banks and other financial institutions, significantlycomplicating the detectionof illegal activities. While regulated platforms have AML policies to prevent suspicious transfers, they arenot foolproof. Furthermore, unlicensed operators often lack such protections.

Authorities Face a Well-Organized Criminal Network

FINTRAC bases its findings on5,000 suspicious transaction reportsbetween 2020 and 2023, primarily related to fentanyl and synthetic opioid distributionwithin Canada. The data revealed that suspected individuals frequently bought chemicals and equipment used for drug production from China and India. Vancouver and Toronto serve as distribution centers for the rest of the country, often facilitating transactions via darknet marketplaces and cryptocurrencies.

At the heart of this criminal network are organized crime groupswho devise elaborate means to avoid detection. For example, these organizations frequently route bank payments through third countries like Singapore, South Korea, andHong Kongto evade scrutiny. FINTRAC traced some of these transactions and unveiled how payment processors linked with online casinos play avital rolein further obfuscating their activities.

The evolving link between online gambling and drug trafficking presents significant challenges to Canadian law enforcement. While the industry has seen phenomenal growth in recent years, itsdigital nature and global reach have made it a prime target for criminal organizations to exploit. Curbing these activities requires cooperation between sngakeholders, including law enforcement, financial institutions, and international regulators.

We are committed to working with our domestic partners and North American allies to protect our communities and our citizens from the scourge of fentanyl and other illegal synthetic opioids that is fuelled by transnational organized crime.

Sarah Paquet, FINTRAC director and CEO

FINTRAC’s alert aligns with a broader push to raise awareness and enhance detection measures within thegambling and financial sectors. This emerging issue is not limited to Canada, as multiple other jurisdictions have raised concerns regarding the role of online platforms in laundering proceeds from transnational crimes. International collaboration and tighter checks on payment processors remain paramount to reducing money laundering risks.