Money Laundering thru Online Gambling with Bots!

Well, here's some more dirty dealing in online gambling. For those of you who've heard about money laundering through brick and mortar casinos, now some clever criminals have figured out how to do their laundry while gambling online! This article appeared yesterday in the UK's The Register.

Online casinos hit by bot armies
Don't bet against money laundering robots
By Burke Hansen in San Francisco → More by this author
Published Tuesday 9th October 2007 10:15 GMT

Botnets are fulfilling law enforcement fears that online casinos could prove fertile ground for money laundering, according to a recent, little-noticed report by risk compliance firm Fortent.

Some are engaging in variations of an old casino scam, in which preprogrammed-to-lose bots transfer dirty money - obtained through stolen credit cards, illicit drug sales or whatnot - to a chosen winner. Others flood a room and conspire to defraud a legitimate player by leveraging the mathematical advantage inherent in knowing more of the cards. Another scam involves spamming a known player in the hopes of stealing password and account information, and then bleeding the account dry through the fraudulent games described above.

Fulltiltpoker.com apparently got hit by a botnet attack recently and refunded money to the defrauded customers. A USA Today tally last month estimated that $2.5 mil to $3.5 mil per year are laundered this way.

"We are definitely seeing activity by bot-herders in online casino games, which is something we hadn't seen before," Symantec security analyst Zulfikar Ramzan noted.

We've generally been skeptical of allegations that the online casino industry would make a good platform for widespread money laundering, primarily due to the ready-made trail left by the transactions. However, the use of botnets is more problematic, due to the fact that until recently botmasters had not been targeted by the FBI, and the actual computers involved belong to innocent third parties.

Money laundering can theoretically be accomplished through many types of transactions - for example, by selling phony merchandise on eBay and transferring the money without delivering anything at all. It's therefore questionable just how much more susceptible cybercasinos are than other online businesses to money laundering. Risk compliance companies like Fortent or AccuitySolutions have products to push, after all. However, the fact that the US authorities have driven much of the online gambling and payment processing activity underground raises serious concerns about just how secure some of these sites are.

Not that gamblers are a risk-averse group, of course.®

Burke Hansen, attorney at large, heads a San Francisco law office