New Money-Laundering Risks in Online Betting Crackdown on Fake KYC, Mule Accounts and Digital Fraud by Payment Apps and Virtual Assets
16 September 2026
The remote betting sector continues to pose significant money-laundering risks, prompting calls for greater regulatory scrutiny and consumer protection measures. In a 2024 assessment, the UK Gambling Commission identified several key vulnerabilities:
The Unease with Remote Betting
1. KYC Evasion: With customers not physically present, remote operators face heightened challenges in verifying identities. The Commission has seen a rise in attempts to bypass "know your customer" (KYC) checks using false documentation, deepfake videos, and AI-generated face swaps.
2. Mule Accounts: Remote betting platforms can be exploited through customers structuring bets to minimize risk, engaging in peer-to-peer activity, or colluding to bet on fixed events. These mule accounts can help launder illicit funds.
Digital Ecosystem Risks
In 2023, the Financial Action Task Force (FATF) published a report expanding its focus beyond gambling platforms to the broader digital ecosystem that connects players, operators, and the financial system.
The report, FATF's first detailed examination of online gambling risks, was informed by a year-long project drawing on information from over 50 jurisdictions, industry organizations, and researchers.
FATF identified e-wallets, mobile payment services, virtual assets, social-media platforms, and digital marketplaces as potential vectors for money laundering in the gambling sector. These digital services can obscure the origin and destination of funds, making illicit activities harder to detect.
Public Health Consequences
While the regulatory risks are significant, the public health implications of online gambling may be even more concerning. In Ontario, emergency department visits for gambling disorders increased significantly after the legalization of single-event sports betting and the expansion of the online gambling market.
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According to a 2023 report by the Institute for Clinical Evaluative Sciences (ICES), the increase was primarily observed among young men. By the end of the study period, visits for males aged 18-29 were 54% higher than expected, and visits for males aged 30-44 were 46% higher.
Moreover, more than 60% of these visits involved co-occurring mental health conditions or substance use, and about one-quarter of visits resulted in hospital admission. With 65 gaming and betting sites operating in Ontario, accounting for $5.7 billion CAD in wagers through 1.2 million player accounts in 2023, the scale of the problem is substantial.
Balancing Market Expansion and Public Protection
As online gambling markets continue to grow, regulators face the challenge of balancing market expansion with robust anti-money laundering (AML) controls, identity verification, and consumer protection measures. The UK's experience with KYC evasion and Ontario's health consequences highlight the need for stronger safeguards.
Common challenges include verifying customer identities, detecting mule accounts, and identifying the origin and destination of funds within the complex web of e-wallets, payment apps, and digital marketplaces. Policymakers must also address the mental health impacts of online gambling, particularly among vulnerable demographics.
While the remote betting sector poses significant risks, it also offers opportunities for economic growth and consumer choice. Striking the right balance will require ongoing collaboration between regulators, industry stakeholders, and public health experts to develop effective policies that mitigate these challenges.