Mafia Money Laundered Through German Online Gambling

While the EU Court of Justice decides what to do with the new German gambling laws, punters can play legally through a wide variety of sites licensed earlier under state-level regulations in Schleswig-Holstein.

Then there are the many sites that make themselves accessible to German players without actually having the license to do so.

Should the Court deem the new federal regulations inconsistent with EU laws, the country may have to authorize online gambling across all 16 states – a 180 degree reversal of current policies that provide only for 20 licenses for internet betting in Germany.

Meanwhile, it seems that the existing opportunities for betting on sports and playing online poker in Germany, as well as the player volume, attract not only the legitimate investors. Namely, the Italian mafia has apparently been showing an active interest in German online gambling forums.

Reports coming out of Italy indicate that gambling sites are a favored money laundering tool for organized crime. As most of the income for organized crime comes from illegal activities, criminals must continuously seek ways to turn the money into legal revenue.

Online gambling can present a good channel for it, as information flow among the European authorities is limited. This is due in part to the fact that several of the jurisdictions where online gambling operators are licensed are lax on tax but strict on privacy. Online casino operators can claim revenues that are not audited in a way that would help the affected countries to see clearly.

While the new Act is not in force, the authorities have no legal background to combat such criminal activities. Moreover, nothing prevents unlicensed sites from operating and reaching customers in Germany. Such sites may even be founded by the mafia to simplify money laundering, and could remain in operation regardless of the outcome of the EU’s review of the German laws.

The police are also powerless since there are no enforceable sanctions against such sites. All of this seems to point towards the need for open and regulated online gambling market, whereby the wide selection of trusted, verified and reliable operators leave no room for shady dealings by criminals.

At the same time, a clear legal background would also empower the police to act against suspected money laundering operations with greater efficiency.