Lithuania: casinos face money laundering risk

Lithuania has published a report that finds the country’s land-based casino industry faces a very high risk from money laundering.

Lithuania.- A government risk assessment has found Lithuania’s gambling industry was at serious risk from money laundering. 

The report found that land-based casinos faced a “very high risk”, and remote gambling a “high risk” of money laundering activity.

It assigned risk levels for each sector of the Lithuanian gambling industry by using data from international and national sources, international studies and reports, data from a sample of gambling businesses, and from the country’s Financial Intelligence Unit.

The risk of money laundering for casinos was rated a maximum risk factor of 4 on a scale of 1-4.

Slot machine parlours, betting and online gambling were rated level 3 for risk, while lotteries were rated 2, a medium risk.

Sectors were also rated for vulnerability, based on the effectiveness of measures aimed at preventing money laundering.

Land-based casinos, betting and slot parlours were all rated 3, indicating high vulnerability. Remote gambling and lotteries were both rated a 2 for medium vulnerability.

The report found that Lithuania’s Gambling Supervisory Authority was ill-equipped to deal with the threat of money laundering in casinos.

It reads: “The number of investigations carried out by supervisory authorities during 2016-2018 is insufficient and not proportional to the risk of the sector.

“This might be caused by the lack of human resources of the supervisory authority, which has only three employees dedicating only 15 per cent of their time for [money laundering and terrorist financing] supervision within the sector.”

The report suggests allowing casinos, slot parlours and betting firms to take debit card payments to allow transactions to be more easily traced, as well as proposing limits on cash deposits, the use of player cards to track gambling activity and “secret shopper” inspections from the authority.

The report reads: “The online gambling industry is attractive for money laundering due to the high volume and fast execution of transactions, including cross-border transactions, as well as low identification requirements, which allow criminals to easily convert illegal funds into legitimate winnings.

“Casinos allow only cash operations and do not verify the source of funds. In addition, the sector has difficulties in performing customer due diligence (there is no evidence that all casinos would employ systems to identify related transactions of players), sanction checks and PEP identification.

“Also, some casinos have customers from sanctioned or high-risk countries, such as Iran and Syria. However, casinos are the most aware of money laundering risks in comparison with other gambling sectors.”

Gambling revenue in Lithuania fell in the first quarter of the year.