The United Kingdom (UK) is globally recognized for maintaining some of the strictest gambling regulations, particularly emphasizing robust Anti-Money Laundering (AML) controls. Despite these stringent rules and rigorous oversight by the UK Gambling Commission (UKGC), a new investigation reveals that crypto gambling sites are skillfully dodging AML regulations, posing significant challenges to the authorities and risks to consumers.
The Crypto Gambling Landscape in the UK
Crypto gambling, once a niche activity, has now grown into a mainstream and flourishing segment within the UK’s gambling market. This growth is driven by cryptocurrencies’ inherent advantages such as privacy, speed, and low transaction fees. Many UK players prefer crypto casinos due to quick payouts often within 24 hours, in contrast to traditional online casinos where withdrawals might take longer.
While a number of crypto gambling sites operate legally with licenses and adhere to UK gambling laws, a concerning portion remains unregulated or operates in “grey” areas. These unregulated sites often overlook several critical compliance measures including AML, Know Your Customer (KYC), and Customer Due Diligence (CDD), which are mandatory for licensed operators.
How Crypto Gambling Sites Circumvent AML Regulations
Research by Betconix, an iGaming intelligence platform, highlights a serious problem—many crypto-only casinos are exploiting regulatory loopholes to facilitate money laundering activities under the radar. Unlike mainstream licensed operators, these crypto sites frequently avoid providing full transparency required by the UKGC. This lack of transparency enables anonymous and cross-border transactions that criminals exploit to launder illicit funds in plain sight.
One key challenge lies in the UKGC’s demand that crypto gambling operators allow comprehensive audits and risk assessments if they wish to enter the regulated market. However, most crypto operators refuse these measures, resulting in no crypto-only casino holding a UK license so far. Consequently, a swath of unregulated or offshore crypto casinos continues to target UK players, avoiding AML oversight and legal enforcement.
Notably, while the UKGC prohibits direct crypto deposits, it permits indirect crypto usage via e-wallets such as Neteller and Skrill. This regulatory nuance leaves openings for offshore platforms to market their unregulated products to UK users through licensing loopholes, evading British jurisdiction altogether.
Government and Regulatory Challenges
Despite the UKGC’s best efforts to clamp down on money laundering risks in the gambling sector, the nature of cryptocurrency transactions complicates enforcement. With high levels of anonymity and rapid fund movements inherent in crypto, detecting suspicious activity becomes challenging. Additionally, local UK-based unregulated crypto sites pose enforcement hurdles, as UK watchdogs have limited legal reach over platforms not formally subject to their regulatory frameworks.
The UKGC has imposed heavy penalties on mainstream gambling companies for AML failures as a deterrent. For instance, in 2025, operators such as Spreadex, AG Communications, and TGP Europe were fined over £1 million for non-compliance with AML requirements. These high-profile enforcement actions demonstrate the regulatory commitment but highlight that rogue crypto casinos operating outside the law remain an unresolved issue.
To tackle these challenges, the UKGC and allied regulators such as the Financial Conduct Authority (FCA) and HM Revenue & Customs (HMRC) emphasize several core AML compliance requirements for gambling operators, including:
- Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) particularly for high-risk customers
- Risk assessments of third-party payment providers integrated into operator platforms
- Monitoring and reporting of suspicious activities
- Identifying vulnerable players and reporting concerns to the UK’s Financial Intelligence Unit
- Adoption of closed-loop payment systems to enhance crypto transaction traceability
- Mandatory AML training for staff to improve detection and reporting
Emerging Regulatory Developments and Technology
Recognizing the evolving risks posed by crypto gambling, UK regulators are preparing new policies and technological tools to strengthen AML compliance. The FCA’s crypto roadmap, published in late 2024, outlines future regulatory priorities including enhanced firm conduct standards expected by Q3 2025. These efforts aim to address historical shortcomings, such as failures in foundational AML systems and practices in the crypto sector.
Additionally, innovations in blockchain analytics and AI-driven fraud detection tools are being developed to trace and analyze crypto transactions more effectively. These technologies could enable regulators to spot suspicious patterns more efficiently and enforce AML rules on otherwise opaque crypto transactions.
Risks and Recommendations for Players
While the crypto gambling market offers convenience and speed, the ongoing regulatory loopholes expose players to risks including fraud, unregulated gaming environments, and potential association with laundering activities. Players are therefore urged to conduct due diligence by:
- Verifying the licensing status of crypto gambling sites
- Researching expert reviews and player feedback
- Avoiding platforms that neglect basic AML and KYC procedures
- Preferring operators that cooperate with UK regulatory standards
Conclusion
The UK confronts a significant challenge as crypto gambling sites increasingly operate in legal grey zones, sidestepping the country’s stringent AML regulations. Despite the UKGC’s rigorous framework for licensed operators, the anonymity and speed of crypto transactions enable illicit activities to flourish hidden from regulatory view. As regulatory bodies enhance AML enforcement strategies and deploy new technological tools, a more transparent and compliant crypto gambling market may emerge. Until then, robust vigilance from both regulators and players remains critical to mitigate money laundering risks and uphold the integrity of the UK gambling sector.
AML Editor’s article was originally published in thetradable on August, 12, 2025