The inclusion of provisions against Internet gambling in an
anti-terrorism bill introduced in U.S. Congress this week has many in the
I-gaming industry fearing that their business is suddenly linked to the
activities of terrorists.
The Financial Anti-Terrorism Act of 2001 is a response to the Sept. 11
terrorist attacks on the United States. The bill seeks to cut off terrorists' funds in part by cracking down on money laundering. One of the ways the
bill seeks to do this is by forbidding any bank instrument from being used
to pay for Internet gambling.
None of the sources IGN contacted saw a link between online gaming and
terrorism.
"Online gaming is not being used at all for terrorism," said Calvin Ayre
of sports betting solutions provider eSportz. "This looks like an example
of opportunism by certain interests in the U.S. federal government to jam a
bill through under darkness."
Even the money laundering issue leaves many in the industry puzzled.
I-gaming experts say it would be hard to launder money through online gaming
sites, especially by using credit cards. And typically small amounts of
money are wagered online, as opposed to the large sums money launderers deal
with.
"I haven't read the bill in detail, but from what I understand it would
make it very difficult to do business, however we would do everything in our
power to find a way to make it work," said one Antigua-based sports book
operator who wished to remain anonymous.
The Antiguan gaming industry is regulated by the International Financial
Sector Regulatory Authority, which has placed these firms into the
"financial institutions" category. As such, the companies are required by
law to notify the government of any suspicious activities.
"Through a seminar that was held, along with countless literature, we
found out that we have more internal procedures in place to protect us from
fraud than is required to protect the government from money laundering," the
source said. "I can't speak for all sports books, but I will say that
Antigua is doing a heck of a good job keeping out the 'dirty laundry.'"
The Financial Action Task Force (FATF), however, targeted online gaming
as a leading avenue for money laundering in its Report on
Money Laundering Typologies 2000-2001 released Feb. 1, 2001. In the
report, the FATF said the Internet in general and Internet gaming in
particular have elements that are enticing to money launderers.
"It is three characteristics of the Internet that together tend to
aggravate certain 'conventional' money laundering risks," the FAFT reported.
"(1) The ease of access through the Internet, (2) the depersonalization of
contact between the customer and the institution, and (3) the rapidity of
electronic transactions."
While the report offered few options for correcting or stopping money
laundering through online gaming sites, the FATF did suggest that any form
of regulation and legalization of Net betting would give governments a
controlling arm against money launderers.
Following the FATF report, the U.S. Senate Permanent
Subcommittee on Investigations released its own report on money laundering.
The report, "Correspondent Banking: A Gateway for Money Laundering," focused on the
relationship between correspondent banking--the practice of using offshore
banks for wire transfers and other financial transactions--and fraudulent
money.
The report targeted Internet gambling as "an activity recognized as a
growing industry providing new avenues and opportunities for money
laundering."
Nevada gaming lawyer Anthony Cabot was skeptical that much money
laundering occurs through online gambling sites.
"Could it occur--sure. But could it occur through offshore banks--sure.
Could it occur in a whole bunch of different circumstances--sure. Any cash
business has the
same issue," he said.
By targeting the payment methods used for Internet gambling, such as
credit and debit cards, many e-gaming experts say that not only will the
industry suffer, but Net betting sites could actually be made more
vulnerable to laundering purposes.
One source who spoke with IGN on condition of anonymity said even
with this bill, "If people wanted, they could still launder."
"Regulation is where it's at," the source added. "If people are able to
use credit cards instead of bank wiring, it makes it even harder to money
launder. If casinos took money only though credit cards, it would make it
very hard, if not impossible, to money launder. If they take away the
credit cards they will be forcing certain people to money launder and make
it easier."