Money Laundering in Casinos: How It Works and How to Stop It

Gambling is a prime target for money launderers due to its fast-paced environment, high volume of cash transactions, and the potential for illicit funds to be mixed with legitimate gambling proceeds. This makes it easier for criminals to disguise the origins of their money.

For casinos and other gambling operators, this is a very serious issue. They are typically subject to strict Anti-Money Laundering (AML) regulations, meaning they can face substantial fines, licensing restrictions, or even the loss of their licenses if they fail to take all necessary steps to minimize the risk of money laundering.

For example, Corbett Bookmakers received a major UKGC penalty in 2025 for repeated AML and responsible gambling failures. Investigators identified cases in which customers lost significant sums without proper intervention or adequate source-of-funds checks. The case was especially damaging because the operator had already been penalized previously.

Despite strict regulations, casinos still face significant challenges in preventing money laundering. One of the most important steps is implementing effective Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) procedures. However, this alone is not enough—casinos must also be able to identify and respond to suspicious activity and various money laundering tactics.

In this article, we explore how money laundering in casinos works and how companies can stay compliant, helping them prevent financial losses, protect their reputation, and maintain customer trust.

How money laundering happens in casinos 

Money laundering in casinos follows a simple pattern: criminals use illicit funds to buy chips, do just enough gambling to look legitimate, then cash out, introducing what appear to be clean winnings into the financial system.

Common tactics include placing small bets across a handful of games to mimic genuine play, or chip-dumping, deliberately losing to an accomplice, who then cashes out on their behalf.

In iGaming, the mechanic is the same. Illicit funds come in as platform credits; apparent winnings go out. The digital environment adds further risk: bonus abuse, multi-account schemes, and e-wallet transactions all create additional opportunities to obscure where money originally came from.

Casino fraud and money laundering trends

Gambling fraud and money laundering are often closely connected. Fraud in the iGaming industry continues to rise. What's changing is the sophistication. According to Sumsub's Identity Fraud Report, iGaming fraud has risen sharply, driven increasingly by deepfakes and synthetic identities. Deepfakes use AI-generated audio or video to impersonate real people; synthetic identities are built from fabricated or stolen personal data. Both are substantially harder to catch than conventional fraud methods, and both are becoming more common. 

Where there is increasing fraud, there is always a risk of money laundering. Stolen funds get laundered through platforms; gambling accounts get used to layer proceeds from other crimes. Deepfakes help criminals bypass weak identity verification and conceal who is actually moving the money. Deepfakes also make account takeovers more effective. Fraudsters may impersonate legitimate customers during verification calls or biometric checks, allowing them to gain control of existing accounts and use them to launder money. So while deepfakes are primarily a fraud tool, they directly increase money laundering risk because they weaken the effectiveness of AML controls such as KYC, customer due diligence, and source-of-funds verification.

This criminal activity has intensified since 2020, with Southeast Asia being heavily affected, according to the UN's most recent report.

“While casinos and junkets have for years served as vehicles for regional underground banking and money laundering, the proliferation of online gambling platforms, e-junkets, and both illegal and underregulated cryptocurrency exchanges in Southeast Asia has changed the game, allowing for faster anonymized movement of funds. At the same time, the creation and success of these systems have helped expand the region’s broader, booming illicit economy, in turn attracting new networks, innovators, and service providers to the criminal ecosystem of Southeast Asia.”

• Jeremy Douglas, UN Regional Representative, Southeast Asia and the Pacific

Suggested read: Money Laundering in Malaysia: How to Comply with New AML Regulations

For operators, the compliance obligation doesn't change: customer due diligence, transaction monitoring, and suspicious activity reporting remain legal requirements. What changes is the tooling needed to meet them.

The three stages of money laundering

Money laundering typically involves multiple stages, and casinos can play a role in each of them. Historically, experts used to talk about the key stages of money laundering (placement, layering, and integration), though in practice they often overlap or occur simultaneously. However, in modern times, the process is often more complicated and less strictly sequential.

Here, let's look at the classic three stages of money laundering and how casinos may be involved.

Stage 1, Placement: Turning cash into casino chips

The first phase involves taking cash or other assets obtained through criminal activity and inserting them into the financial system. Often, criminals will deposit large amounts of illicitly acquired money in ways that draw minimal attention, for example, by breaking it into smaller transactions or using various financial products. 

In a casino setting, money laundering placement can be achieved by converting illicit funds into gaming chips. The main goal is to move funds from direct physical possession into the financial system. 

Stage 2, Layering: Obscuring the money trail

In the layering stage of money laundering, a series of complex transactions is carried out to obscure the illegal source of funds. Criminals might move money through multiple bank accounts, transfer it to different jurisdictions, or mix it with legitimate proceeds from lawful businesses. 

In a casino environment, money laundering layering can include moving between various gaming tables, exchanging chips for cash in multiple rounds, or even transferring funds between different casino accounts. By repeatedly changing the form and location of the funds, they make it increasingly challenging for authorities to trace the money back to its criminal origins.

Stage 3, Integration: Clean winnings explained

The final stage, where the criminally derived funds are channeled back into the legitimate economy, appears to be legitimate earnings. 

In a casino environment, money laundering integration might happen when an individual redeems chips for a check or a bank transfer from a casino, disguised as gambling winnings. The laundered money can be used to purchase assets or to invest in legitimate businesses. 

Check out the details of each stage in this guide: The Three Stages of Money Laundering and How Money Laundering Impacts Business.

Top money laundering schemes in casinos

Money laundering can take on different forms at casinos. Below are some of the key examples of money laundering schemes: 

1. Cash-in, cash-out, and chip walking

This is the simplest, most typical method of laundering money at a casino, also known as “chip walking”. A criminal simply exchanges money derived from criminal activity for playing chips and then converts them back into cash. This way, dirty money can get mistaken for gambling winnings. Some criminals may also split money into several different accounts, which will make them appear less suspicious. However, the simplicity of this approach also means that it can be easily detected by the authorities. For example, in 2024, an Illinois resident was sentenced to 6 years in prison for laundering millions of dollars of drug money through chip walking.

2. Peer-to-peer gambling collusion

Two or more colluding players transfer illicit funds by deliberately ‘losing’ chips or awarding big bets to the other. This peer-to-peer gambling collusion creates an illusion of legitimate gambling proceeds that disguise the criminal source of the money.

3. The Vancouver Model 

The Vancouver model of money laundering received its name after a real high-profile money laundering case. Between 2008 and 2018, casinos in Vancouver were used to launder large sums of money from China. Since Chinese citizens are restricted from bringing more than $50,000 out of their country, criminal groups in Vancouver offered them a workaround. Under the Vancouver model, they could wire a large sum of money to the Chinese bank account of a Vancouver-based crime syndicate and receive cash in exchange upon arrival in Vancouver. The visitors could then take this cash to a Vancouver casino, make a few small bets, and then withdraw it as “winnings” to appear clean.

4. Buying someone else’s casino chips

Criminals offer shady deals to purchase casino chips from other players or agree to settle gambling debts in exchange for a later payout in chips. This circumvents official oversight of chip sales and disguises the origin of funds. 

5. Abusing gambling accounts for transfers

Some players may use their gambling accounts as a means of transferring funds. Abusing casino accounts for money laundering involves players depositing funds, engaging in little or no gambling, and quickly withdrawing the money, often to disguise the origin or movement of illicit funds. Red flags of money laundering through gambling include frequent high-value transactions, low wagering or minimal gaming activity while depositing and withdrawing funds, and cross-border money transfers.

6. Mixing gambling with crypto and NFTs

More advanced criminals further conceal traces of money laundered through casinos by blending it with virtual assets (cryptocurrencies, NFTs), then using it to purchase real estate or any other high-value assets.

This scheme can work in companies with poor AML/CFT frameworks. A criminal deposits crypto, gambles a bit, and then withdraws funds using a different payment method. The gambling winnings appear clean and can be used as seemingly legitimate money.

Red flags of money laundering in casinos

Money-laundering red flags in casinos are actions gamblers may take that strongly indicate potential money laundering. These are also referred to as ‘AML red flags’. What constitutes a red flag can vary by circumstances, but gaming operators should adhere to certain international standards.

FATF 25 red flags overview

The 2009 Financial Action Task Force report “Vulnerabilities of Casinos and Gaming Sector” identified 25 red flags of money laundering:

• Frequent deposits of cash, cheques, bank cheques, and wire transfers into casino accounts
• Funds withdrawn from account shortly after being deposited
• Significant account activity within a short period of time
• Account activity with little or no gambling activity
• Casino account transactions conducted by persons other than the account holder
• Funds credited into account from the country of concern
• Large amounts of cash deposited from unexplained sources
• Associations with multiple accounts under multiple names
• Transfer of funds from/to a foreign casino/bank account
• Transfer of funds into third-party accounts
• Funds transferred from a casino account to a charity fund
• Multiple individuals transferring funds to a single beneficiary
• Structuring transactions (e.g., deposits/withdrawals or wire transfers), also known as ‘smurfing’
• Using third parties to undertake wire transfers and the structuring of deposits
• Use of an intermediary to make large cash deposits
• Use of gatekeepers, e.g., accountants and lawyers, to undertake transactions
• Use of multiple names to conduct similar activity
• Use of a casino account as a savings account
• Activity is inconsistent with the customer’s profile
• Unexplained income inconsistent with the financial situation
• Transfers with no apparent business or lawful purpose
• Transfer of company accounts to casino accounts
• Use of false and stolen identities to open and operate casino accounts
• The customer name and the name of the account do not match
• U-turn transactions occurring with funds being transferred out of the country, and then portions of those funds being returned
• Customer due diligence challenges, e.g., refusal, false documents, one-off/tourist, or passing trade.
• Requests for casino accounts from Politically Exposed Persons (PEPs)

Responding to behavioral and account red flags

Casino operators are required to flag and report any suspicion to the FIU.

QUIZ

Now, try to pass a short quiz and see how many facts you know about money laundering in casinos!

How regulators combat money laundering in casinos

International organizations and national regulators are constantly working on combating money laundering through casinos. Anti-Money Laundering (AML) regulations differ from country to country.  That’s why casinos typically have to establish policies corresponding with the AML regulations in the specific jurisdictions where they operate.

UK and EU AML rules for casinos 

In the UK, casino and iGaming operators are subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017). These require a risk-based approach to customer due diligence, mandatory enhanced due diligence (EDD) for high-risk scenarios, including politically exposed persons, high-risk third countries, and complex or unusual transactions, and ongoing monitoring of all business relationships.

The UK Gambling Commission requires casinos to take the following measures: 

• Develop appropriate AML policies and procedures
• Adopt an effective risk-based approach
• Design an effective AML training program
• Apply Customer Due Diligence and Enhanced Due Diligence checks
• Conduct regular business risk assessments
• Identify and monitor suspicious activity
• Report any knowledge or any suspicion to a dedicated FIU
• Maintain record-keeping mechanisms

In the EU, the 2024 AML Package introduced a fundamentally restructured framework. Obligations on casino and iGaming operators now sit primarily in the Anti-Money Laundering Regulation (AMLR, Regulation 2024/1624)—a directly applicable regulation that replaces the patchwork of national transpositions under the previous directives. The accompanying 6th Anti-Money Laundering Directive (AMLD 6, Directive 2024/1640) addresses supervisory structures, Financial Intelligence Units, and beneficial ownership registers at the Member State level. Together, they repeal AMLD 4 and 5 upon full transposition, with the compliance deadline set for July 2027.

Explore the nuances of gambling regulations across different jurisdictions:

Everything You Need to Know about Canada’s Gambling Regulations: From Sports Betting to iGaming Ontario

Gambling and Betting in Australia—A Complete Guide

Brazil Gambling Laws and Regulations

What is Responsible Gaming?

AML fines and penalties for casinos

Regulators impose strict requirements on companies to combat money laundering and levy heavy fines for AML non-compliance. In mid-2025, Sweden’s gambling regulator, Spelinspektionen, fined three licensed operators—TSG Interactive (PokerStars), Betsson Nordic, and Snabbare—for failing to collect sufficient customer information and source-of-funds documentation. The penalties ranged from SEK 5.5 million to SEK 7 million (approximately USD 582,000 to USD 745,000) due to inadequate customer due diligence and insufficient risk assessment procedures.

AML software for casinos

An AML software is a compliance tool that helps businesses detect, prevent, and report suspicious financial activity related to money laundering, fraud, and other financial crimes.

The best AML software for a casino will depend on the size of the casino, its geographical location, and specific regulatory requirements. AML software for casinos should enable them to meet their regulatory compliance obligations in the following key areas:

KYC, CDD, EDD, and risk-based controls

Know Your Customer (KYC) is a key Anti-Money Laundering (AML) requirement in the gambling industry, helping operators identify their customers and protect their businesses from potential money laundering and other financial crimes.

Customer Due Diligence (CDD) is a specific process within KYC that assesses customer risk and monitors their activity over time, which involves identifying and verifying a customer’s identity, understanding the purpose and nature of the business relationship, and conducting ongoing monitoring to ensure that transactions remain consistent with the operator’s knowledge of the customer and their risk profile.

Enhanced Due Diligence (EDD) is required when a higher level of risk has been identified. This may include customers who are politically exposed persons (PEPs), transactions involving high-risk third countries, complex or unusual transaction patterns, or unexplained changes in customer behavior that are inconsistent with the customer’s known profile.

Casino operators should take a risk-based approach to customer monitoring, adjusting the level of due diligence and ongoing oversight based on each customer’s risk profile.

Transaction monitoring and SARs reporting

Casinos must conduct ongoing transaction monitoring to identify suspicious activity that may indicate money laundering or other financial crimes. Any suspicious activity must be investigated and reported to the relevant authorities with a Suspicious Activity Report (SAR) or Suspicious Transaction Report (STR).

Key features to look for in casino AML software

Reliable AML software would offer the following features:

• Real-time transaction monitoring: To detect suspicious transactions as they occur.
• Risk profiling: Categorizing customers based on their risk level and monitoring high-risk behavior.
• Automated reporting: Generating Suspicious Activity Reports (SARs) and ensuring regulatory compliance.
• Data analytics and machine learning: Using advanced algorithms to identify complex patterns that might indicate money laundering.
• Regulatory compliance: Ensuring the system complies with international AML standards (e.g., the Bank Secrecy Act in the US, the EU’s 5th Anti-Money Laundering Directive).
• Integration with casino systems: Ensuring the AML software integrates well with the casino’s existing player management, gaming, and transaction systems.
• Single dashboard: A centralized dashboard offering several benefits crucial to efficiency, compliance, and effective risk management in a casino setting.

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FAQ on money laundering in casino

• How are casinos used for money laundering?

  Casinos are used by money launderers due to the simplicity of the money exchange process and the inability of many casinos to track down cash flow. Thus, people can exchange dirty money for chips, play with them for a bit, and then exchange them back for cash.

• Which method is used to launder money in casinos?

  There are five well-known methods of money laundering at casinos:

  • Cash-in, cash-out
  • Collaborating with another player
  • The Vancouver model
  • Buying someone else’s chips
  • Using gambling accounts as banks
  • Combining gambling and non-gambling methods.

• What is a chip walking in a casino?

  Chip walking is a money-laundering tactic in which a criminal uses illicit funds to purchase casino chips, engages in little or no gaming activity, and then cashes out, introducing what appear to be legitimately won funds into the financial system.

• What is a money laundering risk for casinos?

  Money laundering risk is something casinos must take very seriously. Casinos are considered high-risk for money laundering under international AML standards and are therefore subject to mandatory AML/CTF obligations. Failure to meet these obligations can result in significant regulatory penalties, including substantial fines and license revocation, as well as lasting reputational damage.

• What are the red flag indicators of possible money laundering through gambling?

  There are many red flags to look for. According to the Financial Action Task Force (FATF), some include:

  • Inconsistent activity
  • Multiple accounts under the same name
  • Multiple beneficiaries sending money to the same account
  • Checks issued to family members
  • Transactions conducted by persons other than the account holder.

  The presence of the above doesn’t necessarily mean that a person is trying to clean their money. Yet, it’s important to pay attention to players who display such behavior. The complete list of red flags can be found here.

• How do casinos stop money laundering?

  It’s not a simple task to stop the spread of money laundering. However, companies can take measures that will help them stay compliant with regulations and minimize the number of illegal activities conducted through them. These steps include the implementation of adequate internal policies, the introduction of the risk-based approach, customer due diligence, risk assessment, and reporting. The complete guide on how to confront the spread of illegal activities can be found here.