Security Think Tank Suggestions Casino Industry Threatened by Lack of Cryptocurrency Regulation

Article by : Erik Gibbs Sep 4, 2024

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The Royal United Services Institute (RUSI), a defense and security think tank, has raised concerns about the growing threat to the global casino industry due to insufficient cryptocurrency regulation. In a recent report, RUSI highlighted the gaming sector’s vulnerability to criminal exploitation, particularly by state actors like North Korea, which is known to use the sector to launder illicit funds.

The report, titled “North Korean Activity in the Casino and Gaming Sector: How Do Jurisdictions Respond?” emphasizes that the rise of cryptocurrency has altered the threat landscape, creating new opportunities for criminal groups to move and conceal assets. The lack of robust oversight in certain aspects of the casino industry has allowed these actors to exploit under-regulated areas, with cryptocurrency emerging as a key tool for laundering money across borders.

One of the significant concerns outlined in the report is the use of cryptocurrency by casino junkets, which are often used to facilitate high-stakes gambling. These junket operators, sometimes linked to North Korean entities, are increasingly turning to cryptocurrency to accept payments and transfer funds, taking advantage of the anonymity and ease of cross-border transactions that digital currencies provide. This practice has raised alarms about the potential for these platforms to be used to finance illicit activities, including North Korea’s weapons of mass destruction (WMD) program.

RUSI’s report identifies several weaknesses in the current regulatory framework for both land-based and online casinos. These include inadequate monitoring of the junket industry, insufficient legislation governing the use of cryptocurrencies in casinos, and a lack of clear guidelines on addressing proliferation financing risks. The think tank argues that these gaps in regulation make it easier for criminal actors to exploit the casino industry and calls for a more coordinated global response to mitigate these threats.

One of the key recommendations from the report is for regulators to embrace cryptocurrency as an opportunity to enhance oversight rather than simply viewing it as a risk. By using blockchain analytic tools, investigators can trace transactions involving cryptocurrency, providing valuable insights into potential criminal activities within the casino sector. Unlike cash, which is untraceable, cryptocurrency transactions, though pseudonymous, can be tracked on the blockchain, offering a way to monitor and investigate suspicious activities.

RUSI suggests that jurisdictions allowing cryptocurrency for gaming purposes should implement additional licensing conditions and establish controls on the types of cryptocurrencies permitted, as well as transaction thresholds. This approach would help to prevent the misuse of digital currencies in the casino industry while ensuring that legitimate gaming operations can continue to thrive.