The Financial Action Task Force (FATF) has released a comprehensive assessment revealing that laundering through gambling is an established threat across many jurisdictions, particularly in casinos and sports betting. According to the latest FATF report, the threat is intensified by remote access, cross-border services, and the availability of numerous payment methods. The assessment, which incorporated questionnaire responses from 80 jurisdictions and written contributions from 29 jurisdictions, examines physical and online casinos, sports betting, lotteries, bingo, arcades, scratch cards, slot machines, and illegal operators. Physical casinos, online casinos, and sports betting are generally considered particularly exposed, while lotteries, scratch cards, and certain other non-casino activities may present lower exposure depending on product design and jurisdictional conditions.
Vivek Aggarwal, the first Indian bureaucrat elected to the Financial Action Task Force (FATF), has identified that risks from virtual assets, which include crypto, remain unresolved, particularly due to decentralised peer-to-peer transactions and gaps in anti-money laundering and counter-terror financing regulation across jurisdictions. Speaking at the Global Fintech Fest 2026, Aggarwal emphasized that emerging technologies like AI pose major risks to India's growth story. The FATF vice-president called for stronger partnerships through FATF workstreams and at the national level to tackle virtual-asset risks and technology-enabled fraud, noting that such threats can no longer be tackled by regulators alone. The current FATF two-year programme includes a toolkit to combat fraud linked to emerging technologies, while the body is also examining cybercrime and scam compounds.
When standard customer checks prove insufficient, financial institutions must escalate to Enhanced Due Diligence (EDD) - a deeper layer of scrutiny built around risk levels rather than fixed checklists. According to Opoint, the most common EDD triggers include politically exposed persons and their close associates, customers or transactions linked to jurisdictions with weak anti-money-laundering controls, correspondent banking relationships, complex ownership structures, and transactions that are unusually large, oddly structured, or inconsistent with known customer profiles. Global standards, including the FATF's Recommendation 10, set the international benchmark for customer due diligence and enhanced measures. In the UK, Regulation 33 of the Money Laundering Regulations 2017 spells out when EDD must apply, while equivalent obligations exist within the EU's Anti-Money Laundering Directives and US frameworks.
According to Aggarwal's assessment reported by The Economic Times, the fintech industry is underestimating several areas of risk. He identified key emerging threats including AI, scam compounds, quantum computing, breaking up encryptions and cryptography. The latest FATF gambling report confirms these concerns, identifying major indicators of money laundering including third-party funding, minimal play, linked accounts, coordinated betting, and withdrawals to unrelated beneficiaries. The FATF vice-president warned that the management of change and the propensity to invest in countering the emerging threat would be a challenge for us. He specifically noted that the major challenge and major risk for Indian fintech is that the realisation is not there due to the industry's rapid growth.
Aggarwal has called for risk-based regulation, with requirements calibrated to the risks posed by different businesses rather than applied uniformly. Speaking at the Global Fintech Fest, he emphasized that effective implementation would also require self-regulation and stronger private-to-private partnerships. The FATF vice-president highlighted that the requirement of investment and the requirement of time and resources that are there are also not being fulfilled in the industry as of now. He warned that this is going to be the major challenge going forward and emerge as a major risk for India's growth story, and hence has to be tackled in time. India has expanded its institutional response to cybercrime, with I4C-type institutions now operating in every state and UT, as reported by The Times of India.
