Crypto & iGaming: A Risk Convergence Testing AML/CFT Defenses

The combination of iGaming and cryptocurrencies has created new opportunities, such as faster payouts and new gaming models. However, this innovation also brings risks. There are complex compliance and fraud challenges that can strain even the best risk management systems.

Two high-risk worlds collide: AML/CFT complexities

Both of these sectors come with well-documented risks.

The Financial Action Task Force (FATF) has explicitly identified virtual assets and online gaming platforms as attractive channels for money laundering and terrorist financing (ML/TF). In its latest targeted update, the FATF flagged a “link between virtual assets and gambling and games of chance,” saying that the potential for criminals to exploit these converging ecosystems is high. 

On top of that, we have the pseudonymous nature of cryptocurrencies, their rapid transfer speeds, and cross-border fluidity complicate AML/CFT compliance, while iGaming platforms already handle high volumes of both small and large transactions across multiple jurisdictions.

Operators face a tough challenge: they must meet both financial compliance and specific gaming rules for AML/CFT at the same time. This can put a strain on their teams and systems.

To handle this, operators usually reinforce their Know Your Customer (KYC) checks, verify the source of funds (SOF) and the source of wealth (SOW), and use advanced transaction monitoring. However, these measures, particularly when combined with on-chain analytics, can delay user onboarding and gameplay. This is a trade-off that many operational leaders could find hard to accept.

Suggested read: Source of Funds (SOF) vs Source of Wealth (SOW)

Crypto volatility: A new method for laundering

Another inherent risk is crypto price volatility. Sudden fluctuations in token value can be abused by malicious actors to manipulate gaming balances or obscure their fund origins.

For example, a player could deposit volatile crypto, use a favorable price move to inflate their balance, and withdraw or off-ramp quickly, which can then be used for value distortion and laundering loops. Unless platforms start utilizing real-time conversion to stablecoins or fiat (which not all do), volatility will remain a vector for abuse.

There are real cases showing how fraudulent gaming platforms can misuse crypto flows. In August 2025, the US Department of Justice charged the CEO of a crypto-focused online casino startup, Zero Edge Corporation, with wire and securities fraud after he allegedly diverted nearly $3.7 million in investor funds into personal crypto trading and online gambling activities.

Smart contract vulnerabilities, DeFi, & blockchain risks

Smart contracts can be exploited if poorly coded or unaudited, potentially allowing attackers to siphon funds. On the other hand, using decentralized exchanges (DEXs) or mixers makes it harder to trace transactions.

This means that iGaming operators should adopt blockchain forensic and analytics tools (such as Chainalysis, Elliptic, or TRM Labs) if they want to track movements on the blockchain and match them with the real-life identities and actions of players.

Regulatory gray zones across jurisdictions

Crypto and iGaming regulations vary widely. Some countries remain unclear or silent on crypto gaming, creating compliance blind spots. Others have implemented strict risk-based AML frameworks that apply to virtual assets and service providers directly. For example, the European Banking Authority (EBA) has issued guidance to help virtual asset service providers manage risks related to money laundering and terrorist financing, especially for features that may hide user identities.

These disparities mean that operators doing business globally must invest heavily in jurisdiction-by-jurisdiction compliance expertise, or risk missteps that could result in unintentional breaches of regulations.

A strong Jurisdictional Risk Assessment (JRA) is crucial for identifying areas where local rules, enforcement levels, and oversight approaches vary. This assessment helps make sure that platforms comply with changing regulations.

Combined fraud typologies in crypto-powered iGaming

Finally, the hybrid nature of crypto iGaming creates new types of fraud, including bonus abuse & multi-accounting (where players can create multiple identities to exploit rewards and bonuses), and crypto-funded chargebacks or rapid withdrawals (fast crypto transactions can make fraud harder to reverse or remediate). 

Platforms need analytics that combine gaming behavior with financial transaction signals to address fraud. Algorithms that analyze both on-chain data and user activity can help identify unusual patterns that suggest fraud. Creating these systems is expensive and complicated, but if done correctly, it will help businesses fight fraud back in a much more efficient way.

Compliance as a competitive advantage

The use of cryptocurrency in online gaming will keep increasing, but so will the attention from regulators and fraudsters. To succeed, platforms need to:

• Treat compliance as a strategic risk control function, rather than a mere checkbox.
• Combine traditional AML/CFT measures with blockchain tracing and analytics for a more effective anti-fraud measure.
• Invest in real-time transaction monitoring that connects on-chain visibility with off-chain user behavior.
• Use transaction monitoring for FIAT money and crypto.
• Build complex rules, analyse patterns to prevent money laundering.
• Invest in AI solutions for AML case analysis and suspicious activity detection.
• Utilize Travel Rule solutions to make sure you stay compliant.

iGaming operators face a significant challenge. They can either create strong systems to protect their users and markets, or they can deal with costly problems later on. Following global standards from organizations like the FATF and new local rules is now necessary, not optional.

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