Canada Concerned About Links Between Online Gambling and Drug Trade

Canada’s financial intelligence agency, FINTRAC (Financial Transactions and Reports Analysis Centre of Canada), has raised alarms over the suspected use of online gambling platforms for laundering proceeds from fentanyl production and trafficking. The revelation underlines an uncomfortable link between the online gaming industry and the opioid crisis that has gripped Canada over the last few years.

Payment Processors Can Obscure Illicit Proceeds

FINTRAC believes many digital gambling platforms are used as tools to obscure illicit funds from fentanyl trafficking. Known individuals involved in the drug trade have reportedly made significant deposits in online casinos, later withdrawing funds from payment processors in Canada, Malta, and the United Kingdom and disguising these proceeds as gambling winnings.

What bothers investigators, though, is how such activities mask the origins of the funds involved. Using payment processors means these transactions appear legitimate to banks and other financial institutions, significantly complicating the detection of illegal activities. While regulated platforms have AML policies to prevent suspicious transfers, they are not foolproof. Furthermore, unlicensed operators often lack such protections.

Authorities Face a Well-Organized Criminal Network

FINTRAC bases its findings on 5,000 suspicious transaction reports between 2020 and 2023, primarily related to fentanyl and synthetic opioid distribution within Canada. The data revealed that suspected individuals frequently bought chemicals and equipment used for drug production from China and India. Vancouver and Toronto serve as distribution centers for the rest of the country, often facilitating transactions via darknet marketplaces and cryptocurrencies.

At the heart of this criminal network are organized crime groups who devise elaborate means to avoid detection. For example, these organizations frequently route bank payments through third countries like Singapore, South Korea, and Hong Kong to evade scrutiny. FINTRAC traced some of these transactions and unveiled how payment processors linked with online casinos play a vital role in further obfuscating their activities.

The evolving link between online gambling and drug trafficking presents significant challenges to Canadian law enforcement. While the industry has seen phenomenal growth in recent years, its digital nature and global reach have made it a prime target for criminal organizations to exploit. Curbing these activities requires cooperation between stakeholders, including law enforcement, financial institutions, and international regulators.

We are committed to working with our domestic partners and North American allies to protect our communities and our citizens from the scourge of fentanyl and other illegal synthetic opioids that is fuelled by transnational organized crime.

Sarah Paquet, FINTRAC director and CEO

FINTRAC’s alert aligns with a broader push to raise awareness and enhance detection measures within the gambling and financial sectors. This emerging issue is not limited to Canada, as multiple other jurisdictions have raised concerns regarding the role of online platforms in laundering proceeds from transnational crimes. International collaboration and tighter checks on payment processors remain paramount to reducing money laundering risks.