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How the Money Laundering of the Online Poker Sites Worked

27 May 2011 by admin

It has been in the online gambling news for the last month and a half. First three online poker sites and now ten more online gambling portals have been seized. The executives of these thirteen online poker and online gambling sites have been indicted on charges of bank fraud and money laundering. Oh, and operating an illegal online gambling business—cannot forget that one since that is high likely to be the driving force behind the Department of Justice’s desire to prosecute.

So the terms money laundering, as well as the charges, have been bandied about without anyone really looking at what was actually happening. So we are going to take a look at how some online gambling industry favorites got busted.

Online gambling operators do not operate in the United States. Instead their base of operations is located overseas in Europe, Central America or the Caribbean. They are located overseas because it is illegal for them to set up operations and be based out of the US. It is hoped that once the federal government gets its head out of the sand and moves to regulate online gambling that operators will be able to establish a branch of operations in the US.

Okay, so online gambling operators are overseas. With the Unlawful Internet Gambling Enforcement Act (UIGEA) in place to work as a wall between them and their player’s money, they have to find a way around the UIGEA wall. Enter payment processors and associates in the US.

Online gambling operators, according to the DoJ, would have associates in the US open bank accounts. Players’ money that was deposited into one of those US bank accounts that the associates opened under a fake business name. The payment processor would then take the money from the US bank account and transfer it to an overseas bank account for the online poker or online gambling operators. At this point operators would keep their profit and then transfer money back through the payment processor to the US bank accounts in order to pay players their winnings.

And that is how the money laundering charges came about. As much as we all love Poker Stars, Full Tilt and the other eleven online gambling operators, it is sad to say that they did commit money laundering for all intents and purposes. But on the other hand they were willing to take the risk in order to help US players play the online casino games they love.

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