Governments and Regulators: Embrace Cryptocurrency for Casino Security
A newly published report titled North Korean Activity in the Casino and Gaming Sector: How Do Jurisdictions Respond? has called upon governments and regulators to collaborate more closely with cryptocurrency exchanges and service providers. This collaboration is vital for policing a significant threat to the global casino industry. The report highlights the use of criminal proceeds generated by North Korea, exploiting the casino and gaming sector using cryptocurrency.
The Changing Threat Landscape
The report states that criminal groups and state actors continue to abuse the limited jurisdictional oversight in some aspects of the casino and gaming sector. The threat landscape has evolved with the rise of the cryptocurrency industry. Criminal actors exploit these under-regulated segments to launder and relocate illicit assets across jurisdictions, a threat exacerbated by cryptocurrency's role in concealing criminal assets.
The Role of North Korea and Illicit Activities
A newly emerged global illicit marketplace indicates that jurisdictions must examine the full scope of threats in the casino sector. North Korean actors are already notorious for exploiting the cryptocurrency industry and designated non-financial businesses and professions, including casinos, to generate and launder revenue for North Korea’s WMD (weapons of mass destruction) program.
Vulnerabilities within the Casino Sector
The report emphasizes casino junkets as potential vulnerabilities for global casino operators. Junket operators and agents are increasingly using cryptocurrency for payments and fund transfers across borders. In some cases, the platforms facilitating these transactions are developed by or associated with North Korea.
Weak spots in both land-based and online gaming sectors include insufficient monitoring of the junket industry, inadequate legislation on cryptocurrency use in casinos, and a lack of guidance on proliferation financing. One key risk mitigation strategy is regulators' acceptance of cryptocurrency as a tool to better track customer transactions.
Investigating Cryptocurrency in Casino Operations
Cryptocurrency involvement in casino investigations might not be obvious unless investigators employ blockchain analytic tools. While cash remains the predominant payment form in casinos, cryptocurrency is sometimes promoted as an option on social media. If used, it presents an opportunity to gain insight into junket operations due to its pseudonymous nature, allowing transaction tracing.
Recommendations for Regulatory Measures
The report advocates for additional license conditions in jurisdictions where cryptocurrency can be used for gaming purposes. Governments and regulators should establish controls on cryptocurrency usage, including the types allowed and transaction limits. Employing blockchain analytic tools to identify red flags is also recommended.
The Importance of International Collaboration
The evolving financial ecosystem necessitates public sector action to restrict the exploitation of new avenues in the casino and gaming sector. Working internationally with crypto exchanges, service providers, the casino sector, and blockchain analytics firms can significantly reduce North Korea's ability to exploit the sector and further limit its capacity to obscure criminal proceeds for its WMD program.
