#StandWithUkraine - Stop Russian aggression against Ukraine.

Russia battles illegal transactions between operators and its banks

Senior Reporter

Russia has a backward and forward history when it comes to gambling laws. Online casinos have been outlawed in Russia since 2017 due to an overwhelming amount of unlicensed operators. Internet service providers blocked gambling-related websites in the country, and the government shared plans of using the latest technologies to ensure that players have zero access to online casinos. As this went on, another major issue surfaced among Russia’s banks - payment pocketing from illegal gambling markets. 

Russia battles illegal transactions between operators and its banks
Image: pixabay.com

History of altering gambling laws in Russia

In 1928 all forms of gambling were banned in Russian territories, but in 1989 laws took a turn, legalizing casinos across the country. First casinos surfaced in Moscow, and by 2002 at least fifty gambling facilities in the city offered services to millions of residents and tourists.

The freedom was short-lived. Not even a decade after the first casino’s grand opening, Putin backtracked on gambling laws due to Georgian organized crimes linked to gambling facilities. Most parts of Russia went back under the blanket ban, and only Altai, Krasnodar, Kaliningrad, and Primorsky regions were permitted to carry on with casino operations. There were over 6,000 at that point, the majority of which had no choice but to permanently close.

The new limitations resulted in high demand for online gambling sites, which were already introduced by offshore sites to Russia’s residents prior to new restrictions. Illegal operators pushed their limits until the government outlawed online betting activities altogether in 2017.

It wasn’t long until offshore casinos welcomed Russian players onto their sites, and soon enough Internet service providers blocked gambling-related websites in the country. Government officials shared plans on using the latest technologies to ensure that players have no access to online casinos. All facts considered, it’s evident that there is a zero-tolerance policy for unlawful gambling operations in Russia.

Russia's banks double up on gambling-related issues

Online casino operators (local and offshore) carried on offering services to Russian players despite the ban. And even as they got blocked, they would return using mirror sites and continued operating. A multitude of Russia’s financial markets joined in on unlawful activities in order to benefit from online casino transactions. More specifically, banks began miscoding, and processing payments from offshore online casinos. In other words, “mislabeling” illegal transactions in order to fly under the radar.

Managers were in on it too and played their part by approving the mislabeled transactions. Major banks, as well as smaller financial companies helped get rid of the evidence, were receiving approximately 0.1% per each set of processed funds. The scheme involved bank workers utilizing payment portals that allowed for 'unproblematic' international money transfers. Foreign banks, overseas casino operators, Sportsbooks, and other gambling services would receive the illegal processed payments, which amounted to at least 60% of total electronic transactions during the time.

The sneaky foreign exchanges came as a surprise to Russia’s payment services, as they had no idea of what was happening until audits brought the miscoded transactions to light. Qiwi and YooMoney were also used among numerous banks for unlawful fund transfers.

Last year, three small banks got their licenses revoked, and three more were busted since the month of April. Regulators took action again operators as well - online casinos and illegal Sportsbooks without a Russian gaming license could no longer accept cards or electronic payments, which resulted in massive losses for many of the sites. Additionally, operators will owe 1.5% of every bet to the state. Payment systems will also be closely regulated in order to prevent further miscoded transactions.

Leave Comment

Casino news

Betsson’s Focus at LatAm: Record-Breaking Revenue in Q2
Author
By Alex Gambler
Views
58

Betsson’s Focus at LatAm: Record-Breaking Revenue in Q2

Betsson AB announced its latest report with numbers and statistics. The second quarter of Betsson’s work turned out to be record-breaking as the Q2 revenue was as significant as €186.3m (£158.9m/$189.5m), with the net income equal to €28.6 million or €0.21 per share. Though the results in Western Europe fell by about 40%, the market that succeeded was Latin America.

Betting news

Crucial Compliance takes BetProtect under its wing | Founders will be involved in future development
Author
By Rebeka Kulakevich
Views
61

Crucial Compliance takes BetProtect under its wing | Founders will be involved in future development

It’s not unusual to see successful companies buy out small businesses with potential. Owners who get tired of running their business often sell their company and seek either a full or partial exit. The big dogs typically do so for their own game and only keep the original founders on board if the brand is sold for a lower acquisition price. However, companies like Crucial Compliance operate on a more heart-to-heart level. At the beginning of April, the industry-leading compliance specialist company acquired a father and son based brand called BetProtect in order to combat gambling addictions, while also maintaining ties with the duo founders. 

Cashless gaming prompts concerns | UKGC shares survey results
Author
By Rebeka Kulakevich
Views
17

Cashless gaming prompts concerns | UKGC shares survey results

Anyone born before 1999 will likely remember the joys of playing outside, splashing around in muddy puddles, and occasionally getting a mouth full of sand falling off the swings. Picking random berries off bushes and eating unwashed apples right off the trees didn’t phase anyone in the slightest. Unfortunately, new generations won’t get the luxury to tell the same story, as the ongoing pandemic resulted in fear touching cash. Tech companies put some gas into the development of cashless payments, which casino facilities, especially ones in Nevada, ate right up. Now the UK land-based casinos want to get on board with the new system, but survey statistics show that gamblers aren’t too thrilled about the futuristic payment option.

Popular

Author
By Alex Gambler
Views
58

Betsson’s Focus at LatAm: Record-Breaking Revenue in Q2

Betsson AB announced its latest report with numbers and statistics. The second quarter of Betsson’s work turned out to be record-breaking as the Q2 revenue was as significant as €186.3m (£158.9m/$189.5m), with the net income equal to €28.6 million or €0.21 per share. Though the results in Western Europe fell by about 40%, the market that succeeded was Latin America.

If you are an iGaming journalist and are passionate about writing news articles, don’t hesitate! Contact us and publish on Casinority news!
Contact Us