The Isle of Man Gambling Supervision Commission (GSC) has highlighted a recent report from MONEYVAL that discusses how virtual assets (VAs) such as cryptocurrencies are being used to facilitate money laundering, terrorist financing, and proliferation financing (ML/TF/PF) in the gambling sector.
The report, which builds upon the initial review conducted in 2023, reflects on the rapid evolution of cryptocurrency and virtual asset technologies and how they are used to circumvent financial regulations.
While many European jurisdictions have conducted investigations into VAs and virtual asset service providers (VASPs), not all of these are in-depth or analyse specific targeted financial sanctions (TFS) evasion risks.
Moreover, 81% of these jurisdictions require VASPs to be licensed, but not many authorities are enforcing this or encouraging regulators to take action against bad actors.
Cryptocurrencies and other VAs are widely accepted in online casinos, with numerous black market casinos carrying them as their main currency.
A particular allure of VAs is the ability to remain anonymous, which was a particular issue when a blockchain account bet $32,537 on the capture of Venezuela's president just hours before it was officially announced.
As the blockchain makes it impossible to identify the bettor, Polymarket could not verify whether the bet was placed with insider information.
To address these growing threats, the GSC is advocating for increased collaboration among various jurisdictions and international regulators.
A spokesperson for the GSC said: “VA use in gaming and other sectors presents unique risks. Some jurisdictions allow VA use in online gambling under strict conditions. Case studies show exposure to illicit activity, including links to child abuse material.
“Emerging typologies include sanctions evasion, fraud, and proliferation financing. New threats include state-sponsored actors using VAs for proliferation financing, money mule networks, and fraud schemes exploiting the anonymity and speed of VAs.”
The GSC also suggests that virtual asset technology must be assessed on a country-wide basis as part of national risk assessments (NRAs)
