The Royal United Services Institute (RUSI), a leading defense and security think tank, has issued a pressing call for governments and regulators worldwide to forge stronger ties with cryptocurrency exchanges and service providers. This collaboration aims to enhance policing and mitigate significant threats facing the global casino industry, particularly from criminal elements exploiting digital currencies.
A major concern highlighted in RUSI’s report, “North Korean Activity in the Casino and Gaming Sector: How Do Jurisdictions Respond?” is the criminal use of proceeds generated by North Korea through the casino sector, notably employing cryptocurrencies. The report underscores the sophisticated strategies used by criminal and state actors to bypass regulatory oversight in certain casino and gaming operations, exacerbated by the burgeoning cryptocurrency market.
The official report (pdf) from The Royal United Services Institute (RUSI) details how illicit actors leverage less-regulated facets of the casino and gaming industry to launder and transfer illegal assets across borders. This issue is intensified by cryptocurrencies, which offer new methods to mask the origins of criminal funds. “Criminal actors exploit under-regulated aspects of the casino and gaming sector to launder and move illicit assets across jurisdictions. This threat is further compounded by the reported involvement of cryptocurrency as a means to move and obfuscate criminal assets,” the report explains.
Vulnerabilities and Regulatory Gaps
The presence of casino junkets is also identified as a particular vulnerability, according to Asia Gaming Brief, with operators increasingly accepting and moving funds via cryptocurrency across international lines. Some of these crypto platforms are developed by or connected to North Korean interests. The report criticizes the current monitoring systems within the land-based and online gaming sectors, highlighting a significant gap in effective cryptocurrency legislation and best practices for managing proliferation financing risks.
However, the report also recognizes cryptocurrencies as a potential asset in regulatory frameworks, offering unique opportunities to trace and monitor transactions via blockchain analytics. This could transform how investigations into junket operations and other casino activities are conducted, moving away from the untraceable nature of cash transactions.
Recommendations for Robust Crypto Regulations in Gaming
RUSI advocates for stringent license conditions in any jurisdiction where gaming-related cryptocurrency transactions occur. It calls on governments and regulators to establish precise controls on the use of cryptocurrencies within the gaming sector, which might include specifying permissible types of digital currencies and setting transaction limits.
Emphasizing the changed landscape due to cryptocurrencies, the report insists on a collaborative international approach involving crypto exchanges, the casino sector, and blockchain analytics firms. This partnership is crucial for effectively curtailing the potential misuse of casinos by North Korean entities and other illicit actors, thereby hindering their ability to funnel proceeds towards activities like weapons of mass destruction programs.