The US Department of State says in its 2019 International Narcotics Control Strategy Report that Georgia should take steps to supervise its gaming industry. The report reads that there are 416 lotteries and gaming institutions registered in Georgia and 31 casinos. The Report raises questions over the oversight of Georgian Gambling Industry.
VULNERABILITIES AND MONEY LAUNDERING METHODOLOGIES
“Illicit income is mainly generated from fraud and cybercrime, either domestically or abroad. Social engineering schemes are most commonly used to commit mass marketing fraud. Banking systems and money transfer services are the primary means to move funds and, often, Georgia is just one link in an international criminal chain. Georgian banking institutions are used to transfer funds from one jurisdiction to another. According to the Financial Monitoring Service (FMS) January 2018 Annual Report, there are 416 lotteries and gaming institutions registered in Georgia and 31 casinos. The AML obligations of gaming establishments are identical or substantively similar to the requirements placed on other covered entities. The Ministry of Finance supervises lottery organizations, gaming institutions, and casinos for AML compliance. A new casino is being built on the border with Russia that may provide a vehicle for the laundering of proceeds from organized crime. In 2017, the FMS, Georgia’s FIU, identified possible attempts to avoid Iranian sanctions by nonGeorgian residents of Iranian origin, or with ties to Iran, who established legal companies in Georgia to conduct financial transactions with third countries. The FMS also examined the financial transactions of a number of Georgians who sent money through remittance services to a small group of individuals in a neighboring country. The examination showed most of the Georgians involved in these transactions had criminal records for drug crimes.
Enhanced due diligence measures are applicable only to foreign PEPs. Draft legislative amendments would extend enhanced due diligence measures to domestic PEPs and the heads of international (intergovernmental) organizations. Bitcoin and other virtual currencies are becoming extremely popular in Georgia. Recent international investigations reveal Georgia is a popular virtual currency mining location. Georgia does not have experienced cybercrime labs and has only a handful of qualified and competent digital forensic analysts. Training and capacity-building efforts need to be directed toward establishing state-of-the-art cybercrime labs, improving analyst capabilities, and improving legislation on collecting and analyzing digital evidence. The growth of the gaming industry, including internet gaming, is concerning. In 2017, casinos and gaming institutions filed over 500 CTRs but zero STRs. No STRs by the gaming industry in past years raises questions about their compliance with existing regulations and the effectiveness of supervision.”
