Lithuania At High Risk Of Money Laundering

Land-based casino industry in Lithuania faces a “very high” risk of money laundering, while the remote gambling sector faces a high risk, according to a risk assessment conducted by the country’s government.

Risk thresholds for any part of the gambling industry in Lithuania is calculated by “data from a variety of international and national sources,” foreign surveys and records, and figures generated by a survey of gambling businesses. The research was also funded by the Financial Intelligence Unit in the region, which was sponsored by supervisory and law enforcement authorities.

The risk of money laundering for casinos, described as the “attractiveness and ability of criminals to exploit a specific medium to launder criminally obtained property,” has been ranked as the maximum 4 on the 1-4 scale of the study, according to the study.

The report explained: “The casino sector is exposed to risk because the activity is based on a significant number of cash flows, which is attractive for organised crime groups, PEPs [politically exposed persons] and those coming from high-risk countries to launder money. The Modus operandi is easy to implement as it requires basic planning and basic knowledge of how gambling systems work.”

The level of risk for slot machine parlours, betting and internet gaming was all rated as a 3, suggesting a high risk.

“The online gambling industry is attractive for ML due to the high volume and fast execution of transactions (including cross-border transactions) as well as low identification requirements, which allows criminals to easily convert illegal funds into legitimate gambling earnings,” the report concluded.

The risk had been rated as 2, indicating a medium risk for lotteries.

The report also assessed the vulnerability of each medium to money laundering, based on the totality and effectiveness of measures to prevent the realisation of a risk of money laundering, taking into account the scale and perception of the risk.   It once again used a scale of 1-4, with the most fragile representing a 4.

It has been rated as a high risk 3 for land based casinos, gaming, and slot parlours.

The Government said: “Casinos allow only cash operations and do not verify the source of funds. In addition, the sector has difficulties in performing customer due diligence (there is no evidence that all casinos would employ systems to identify related transactions of players), sanction checks and PEP identification.

“Also, some casinos have customers from sanctioned or high-risk countries, such as Iran and Syria. However, casinos are the most aware of money laundering risks in comparison with other gambling sectors.”

The study concluded that the Gambling Supervisory Authority in the country has been ill-equipped to deal with the problem of casino money laundering.

“The number of investigations carried out by supervisory authorities during 2016-2018 is insufficient and not proportional to the risk of the sector. This might be caused by the lack of human resources of the supervisory authority, which has only three employees dedicating only 15% of their time for [money laundering and terrorist financing] supervision within the sector.”

The study recommended requiring casinos, slot parlours and gaming to use debit cards to track transactions more effectively, placing restrictions on cash withdrawals, using player cards to monitor the gambling behaviour of each player, and the Supervisory Authority’s “secret shopper” style checks.

Online gaming and lotteries were also scored a 2 for medium risk, though the study acknowledged that some internet providers had more rigorous criteria for anti-money laundering than others.

The study marked Lithuania ‘s second completion of a National Money Laundering and Terrorist Financing risk assessment, following an earlier version in 2015.