Bizarre Online Gambling Movie-Plot Threat

This article argues that online gambling is a strategic national threat because terrorists could use it to launder money.

The Harper demonstration showed the technology and techniques that terror and crime organizations could use to operate untraceable money laundering built on a highly liquid legalized online poker industry -- just the environment that will result from the spread of poker online.

[...]

A single poker game takes just a few hours to transfer $5 million as was recently demonstrated -- legally -- by American player Brian Hastings with his Swedish competitor half a world away. An established al-Qaida poker network could extract from the United States enough untraceable money in six days to fund an operation like the 9/11 attack on the World Trade Center.

I'm impressed with the massive fear resonating in this essay.

Posted on November 12, 2013 at 6:35 AM • 54 Comments

Comments

ScottNovember 12, 2013 7:05 AM

Therefore, guns are a national security threat because terrorists could use them to shoot someone.

DavidNovember 12, 2013 7:05 AM

So they claimed to have set up a computer to control two other fake players (other computers), and had it play games to affect the transfer of the money, thereby "laundering" it.

Reasonable enough, but let's try that scenario in a different circumstance:

It takes $125 to register a company in Ohio. Set up a business web site to take orders, then follow the same scenario with fake orders.

Fake Customer: I'd like to order 1 million of your [popular inane widget].
Fake Business: Widgets ordered. Pay $5 million.
Fake Customer: Payment sent. The [widgets] were perfect!
Fake Business: Payment received.

If your goal is to fund a short term operation, then all you have to do is pay the quarterly taxes long enough to not have an official come knocking on your door before the plot is carried out.

Conclusion according to the article: Online ordering can be used to launder money! We must stop the expansion of online businesses!

So, while the fear is palpable, and the effort they seem to have put into their "proof" is better than just sitting in an armchair, it proves nothing that couldn't be applied to a lot of normal activities.

kingsnakeNovember 12, 2013 7:12 AM

Planes could be used to transport terrorists! We must go back to riding steam locomotives.

Steam locomotives could be used to transport terrorists! We must go back to riding horses.

Horses could be used to transport terrorists (and Mongols)! We must go back to walking.

Feet could be used to transport terrorists! We must go back to primordial ooze.

Problem solved.

PiperNovember 12, 2013 7:15 AM

Have they looked into the money laundering potential of car-washes? I saw something about that on TV.

ChristianNovember 12, 2013 7:15 AM

Or you could just form a stock corporation and legally get money invested into your businessplan.

I wonder if you really care if the money can be traced to investors afterwards. Additionally it would be deniable for the investors: You could have thought it was a real company.

-> Stock Exchanges are a strategic national threat!


NixNovember 12, 2013 7:16 AM

David, it's not 'online ordering', it's all business, and all banking, in fact all cross-border flows of money and people (who can carry money) of any kind. Obviously they should all be banned!

(In other news, terrorists rely on the presence of a breathable air supply for 100% of their operations to date. We should ban it.)

Nicholas WeaverNovember 12, 2013 7:18 AM

I'm depressed. The second author is just generally stridently anti-gambling. I would have hoped for a Las Vegas shill instead, since that is what it reads like.

JWNovember 12, 2013 7:24 AM

Wait - they're claiming over a million an hour, and then saying a 9/11 attack could be funded in 6 days? Most estimates put the 9/11 attacks as well under a million to plan, so apparently not only are their risk models screwy but their math is too!

DavidNovember 12, 2013 7:30 AM

@Nix,

You are, of course, correct. I was just trying to keep with the spirit of their "proof."

The editorial also mention demonstrating this to the staff of some government officials. The fact that they received more than the time of day from these people could be disturbing, unless those staffers went back and said pretty much what the commenters here are saying.

Climates of fear are hard to contain--if a large enough group can be convinced that X is bad, then the nearest neighbors W and Y should start getting very nervous.

AnuraNovember 12, 2013 7:38 AM

I hear trrrsts have used the intertubes as well; maybe we should ban it. However, I suggest we get to the root cause: if people stop having sex, then we will eventually get rid of all trrrrrrrism.

Alan KaminskyNovember 12, 2013 7:48 AM

Last week New York State voters approved a constitutional amendment to allow expanded casino gambling in the state.

New York: the world's next money laundering capital.

Muddy RoadNovember 12, 2013 7:51 AM

American casinos could Never Ever pull off anything like that!

They are honest and pure while offshore "online gambling" is immoral and terroristic,

...according to PR hacks from the American gambling lobby.

Your momNovember 12, 2013 7:57 AM

Paying taxes is a threat to security. You can see what they are doing with the money.

GaxxNovember 12, 2013 8:05 AM

It's odd how my hysteria we get when someone finds a way to launder money by some new, fairly novel, method. It doesn't even have to be that original (gambling isn't really very original as a means to launder money).

Given how many easy methods there are to launder money in a, largely, electronically-mediated economy it seems reasonable to assume that there are a plethora of means to launder money.

KahomonoNovember 12, 2013 8:06 AM

The fear resonating through the article is legitimate: it's the brick and mortar casinos' fear of online poker competing with their higher-fee poker rooms.

Poker players still have plenty of reasons to want to play in live games as opposed to online, but the B&M casinos don't have a lot of confidence in their ability to compete

AnuraNovember 12, 2013 8:06 AM

You have to wonder, if we had put half the effort we currently spend on protecting us from our fears into working to end poverty and hunger in both the developed and undeveloped world, while also helping to build the infrastructure for third world countries to build strong economies, how much would we really have left to fear?

duckbillNovember 12, 2013 8:21 AM

Isn't there are requirement to document all transactions over $10,000 and report them to the government. Doesn't this also apply to casino's. Somehow the money gets transferred from the players to the casino and then to the players again and if large enough aren't these all recorded and traceable.

The only cases I know of casinos being used to launder money involved physically entering the casino, cashing an instrument for chips, gambling a little, and then cashing the chips for cash money and departing.

The transfer into chips and from chips to cash helps obscure the trail, but probably doesn't completely eliminate it.

AlanSNovember 12, 2013 8:34 AM

It's bizarre but it also has a certain logic along the lines of the Geer talk you referenced yesterday.

Geer: "Perhaps the point is that the more technologic the society becomes, the greater the dynamic range of possible failures. When you live in a cave, starvation, predators, disease, and lightning are about the full range of failures that end life as you know it and you are
well familiar with all of them. When you live in a technologic society where everybody and everything is optimized in some way akin to just-in-time delivery, the dynamic range of failures is incomprehensibly larger and largely incomprehensible."

And the greater the dynamic range of possibilities with which to practice the politics of fear. Interestingly in this case the authors claim the technology allows x to happen and go undetected (i.e. the total information strategy doesn't work) so they argue that online gambling should be banned so x can't happen.

Easy solutionNovember 12, 2013 8:38 AM

Easy solution: the federal government should hire 100,000 people to play poker online full-time and win all the money that the terrorists are trying to launder.

butWaitNovember 12, 2013 10:04 AM

Clearly the article is petty shroud-waving. The Great and Glorious NSA, the Pride and Joy of the Motherland, are monitoring all electrons, all activities and all transactions at all times in order to keep us safe. They will get the bad guys for us. Won't they? They already have the data...

AlqaedaNovember 12, 2013 10:14 AM

Why don't people stop thinking AlQaeda is the only tangible threat to their lives? It's becoming an obession.

We need to fight terrorism, period. Put a name on it and the threat becomes much more important in the collective mind.. And repeating it everytime just makes it worse.

Also, reading this kind of article will make people think we should limit liberties in order to protect ourselves. Which doesn't make sense and I am sure you all agree.

Brian M.November 12, 2013 10:25 AM

There are lots of ways to launder money, and I do remember this gambling scheme from The Rousters.

Sure, a terrorist group could start up a casino business. Just like the mob, just like drug dealers, and all of the rest of them.

From Der Spiegel, "Transparency vs. Money Laundering: Catholic Church Fears Growing Vatican Bank Scandal":

The documents confiscated from Gotti Tadeschi, a former confidant of the pope, provided Italian law-enforcement officials insight into the innermost workings of the Vatican bank. The secret dossier includes references to anonymous numbered accounts and questionable transactions as well as written and electronic communications reportedly showing how Church banking officials circumvented European regulations aimed at combating money-laundering.

Perhaps the terrorists should be setting up their own religion, including a private bank.

PiperNovember 12, 2013 10:27 AM

@Piper - Car washes are a really bad way to launder money.

It is really hard to stick the money onto the cars, so some it will go down the drain.

Use a washing machine, with a good filter.

Peter A.November 12, 2013 10:37 AM

This is nonsense. You need a financial instrument to buy virtual chips at the virtual casino. Then the winner needs a financial instrument to cash back all those chips. Aren't these financial transactions traceable in the same way as any other cross-border transfers?

DV Henkel-WalaceNovember 12, 2013 10:38 AM

Thinking is a threat because terrorists could use it to plan acts of violence. We need to… oh, wait, the US educational system already has this one covered.

No wonder "all the terrorists are foreigners"

paulNovember 12, 2013 10:44 AM

Oddly enough -- as we can see from the risibility of all these hypotheticals -- once some business method has been in use for a decade or so its usefulness for funding terrorists declines to zero.

BryanNovember 12, 2013 11:34 AM

@Anura

You have to wonder, if we had put half the effort we currently spend on protecting us from our fears into working to end poverty and hunger in both the developed and undeveloped world, while also helping to build the infrastructure for third world countries to build strong economies, how much would we really have left to fear?
Add education and micro loans. Education is key to knowing how to make money yourself. Micro loans help people get started with small businesses in poor rural areas.

AnuraNovember 12, 2013 11:55 AM

@Brian

There is no doubt that education is important, and while microfinance can be helpful for small individual owned and family owned businesses, I have a lot of hope that businesses based on an employee or community ownership model, initally fully subsidized by government, could be a great way to quickly grow local economies.

JimNovember 12, 2013 12:09 PM

While its true criminals and terrorists could use shell companies and other more traditional methods to launder money, the transactions record the true endpoints of money going in and coming out. legalized internet poker enables the use of mules to deeply hide the donor and recipient. Take a look - http://www.undetectablelaundering.com

BryanNovember 12, 2013 12:22 PM

As for this using of fear of terrorism to get laws passed. Creative ways to make it look ridiculous needs to be developed. Ridicule tends to work wonders when the majority can see why.

fajensenNovember 12, 2013 3:22 PM

Why go through all that trouble when a bank, like Wachovia will launder any amount you could possibly want?

Bill PrattNovember 12, 2013 5:30 PM

Terrorists are known to be approximately 70% dihydrogen monoxide as well as habitual consumers of same.

Dirk PraetNovember 12, 2013 6:49 PM

I have a much better strategic national threat finance based movie plot.

Imagine a small group of terrorist masterminds inducing a culture of greed and wrecklessness in financial institutions and the public at large. They infiltrate the government, succeed in deregulating the entire industry and come up with highly complex financial products that nobody understands but that make them rich beyond imagination. At some point the entire system collapses, leaving hundreds of thousands pennyless, at which time the government puts them in charge of handling the situation, entrusting them with trillions of dollars coughed up by the same ordinary folks they've bankrupted. Nobody ever gets convicted or even indicted.

This of course could never happen.

AnuraNovember 12, 2013 7:18 PM

@Dirk Praet

I've got the plot of your sequel:

The terrorists learn that they can work with the government to grow surveillence, put cameras in drones and on streets, and run private prisons, while influencing policy to get harsher sentences and more convictions. On top of that, they work to keep the income down for the vast majority of the population, with the hopes of further increasing crime. The terrorists blame this on immigrants, and use misdirection to get us focused on protecting ourselves from foreign terrorists, ignoring the real threat.

Within a couple of decades, machines are able to fully replace assembly line workers, dock workers, warehouse workers, driverless cars are able to replace taxi and truck drivers, algorithms are able to more effectively replace customer service, self checkout replaces cashiers. As the growth in efficiency exceeds the growth in production, unemployment takes a sharp upturn and jumps into a vicious cycle. Civil unrest grows, and the surveillence state is able to make arrests and convictions of dissidents at an unprecedented rate. The prison industry becomes the fastest growing sector and begins using prison labor to build new prisons, at minimal expense and maximum profit. In the end, the terrorists win.

The third movie in the trilogy ends with the good guys winning, although it's the darkest and bloodiest of all.

Dirk PraetNovember 12, 2013 7:57 PM

@ Anura

I think we're on to something here. I really should take this to a famous Hollywood movie director who is a regular at our local pub and currently working on a 16th century action epic called Emperor.

pointless_hackNovember 12, 2013 9:15 PM

The instrument (teh world wide interwebs) might be an unobserved part of the solution. What religious zealot can resist some satisfaction from scorching flames at every news site and social network? They MUST feel some sense of having been heard.

If criminals had that kind of money, they would be doing whatever it is they wanted the money for in the first place. If you have that kind of money and you are money laundering, the chances of desiring terrorist martyrdom are lower.

That being said, it should not become the job of people who know banking laws, to explain the rules governing the transfer of large ( > $5,000?) sums of money by wire transfer.

Whoever is trying to scare us some more is still doing it right, but I'm of the opinion that just like people get tired of charity requests, we have gotten too exhausted with terror to feel rational fear anymore.

Some of these problems are mathematically intractable. We need to solve the one's we can, and identify the people who commit the really bad crimes and confront them with all the evidence we have gathered on [America and therefore] them in the last ten years. Give them so much grief they want to die to get away, and make the populace happy by making an example of them, in one felt swoop.

Just don't fall to the failing of complacency. Eternal vigilance is the price of freedom. Watch carefully, and swing a big stick!

Nick PNovember 13, 2013 12:17 AM

@ Dirk Praet

Props for coming up with the best one! Of course, there could be a prequel with an even bigger movie plot scam.

This one would take place in the late 1800's with Americans who are deeply suspicious of central banks and scheming bankers. They will have already experienced troubles caused by large banks and scheming investors. At the same time, certain elites want a central bank that would give them control over the economy such that they could make billions off tax payers.

They would meet in secret on Jeckyl Island to form their plan. Their dastardly scheme involves creating a private, for-profit corporation that controls the money supply of the whole US economy. After initial investments, they'd print most of it from thin air, loan it to US, and even charge interest on it. A form of indentured servitude for America whereby a certain elite few control the country's entire financial future. If it begins, who could even stop it!? (In 2008, we found out the answer.) As a twisted trick and inside joke, they'd even call it something government sounding. Maybe "Federal" something...

Note: My version has it get shot down by a public with some sense. The real version might be tougher on even a Hollywood audience. I mean, it essentially implies America was scammed into having owners and the scam has lasted 100+ years. Might interfere with people's belief that their support of (insert political party here) means something.

65535November 13, 2013 2:12 AM


“A drug cartel could arrange for buyers' machines to be remotely linked and lose to the aliased cartel machines.” –Tampa Bay Times

This would mean that said “on line gambling” is rigged. It is a digital confidence game. More to the point this is an on line fraud (and petty to grand theft).

I have no illusions that there are a number of fraudulent digital gambling sites – possibly a large number of them. My point is the article indicates the money laundering is done by rigged machines – which also skin the legitimate on line gambler.

Whether it is a scrip kiddy, a lawyer, or actual card bender - Cheating is cheating. It usually ends in a messy brawl.

I will say that Los Vegas has its share casinos and of money launderers. A drug dealer could just walk in with a wallet full of cash. Then he could buy some chips. He could play one rounds of roulette and then cash in his chips. This would instantly “wash” his dirty laundry.

I am of mind that any legalized vice has some money laundering capability. Why stop there. Go on line at eBay. You will find fraudsters. Get two who know each other and you could have a nice little money laundering ring.

But, should the NSA be involved in tracking these vice crimes? I think we are seeing is “Mission Creep” with the NSA and their customers - like the FBI. We could also be seeing an attempt to justify their vast surveillance of US Citizens and other people.

65535November 13, 2013 2:32 AM

Talking about hypocrisy, when is there going to be a Securities and Exchange Commission investigation into In-Q-Tel and $37 million a year invested by the CIA in front companies that have bolstered the NSA? I would guess never. Can we call that money laundering? – Yes!

“As of August 2006,In-Q-Tel had reviewed more than 5,800 business plans, invested some $150 million in more than 90 companies, and delivered more than 130 technology solutions to the intelligence community. In 2005 it was said to be funded with about $37 million a year from the CIA” –Wikipedia

https://en.wikipedia.org/wiki/In-Q-Tel

Dirk PraetNovember 13, 2013 9:26 AM

@ Nick P

This one would take place in the late 1800's with Americans who are deeply suspicious of central banks and scheming bankers.

It keeps getting better. Only thing left to do at his point is find a producer, come up with some really cool sounding names for the protagonists and we are sitting on a project that has the potential to dwarf Star Wars 8-)

JimFiveNovember 13, 2013 9:55 AM

@65535:
"A drug dealer could just walk in with a wallet full of cash. Then he could buy some chips. He could play one rounds of roulette and then cash in his chips. This would instantly “wash” his dirty laundry. "

This doesn't wash his money. The idea of money laundering is to make it look like the source of the money is legitimate. If you walk into a casino with dirty money and walk out with money, that money is still dirty.

If the casino is complicit then a scheme would be to (have mules) go into the casino and lose a lot of money. The casino would then hire the boss in some "legitimate" capacity (construction, consultant, etc) and pay him with the laundered money minus a transaction fee, of course.

If the casino is not complicit then you need to do something like this poker scheme where all of the mules are there to lose their money to the "legitimate" player. However, this type of scheme seems problematic as the legitimate winner will need to declare the income (or its just another form of dirty money) and the money trail doesn't seem to be that obscured.

Clive RobinsonNovember 13, 2013 11:05 AM

@ 65535,

The best way to launder money is with a bank...

Failing that a Pay-Day lender / cheque cashing service...

Then a Buearue of exchange with travelers cheques...

All of which raise loans from Off-Shore banks to minimise profit / taxation etc. The mechanics of back-to-back loans and cut out companies that own other companies abroad etc is fairly reliable and used by major companies to avoid taxation.

Then there is generating a property spiral in some place like Spain or Portugal where by you have several companies buying up land developing it etc etc and selling it around to bogus letting agents etc etc.

There's a whole load of other ways such as bogus film companies and even the likes of carrosel and other VAT fraud which make a profit on the laundering...

These are all well practiced and optimised methods that have been working very well for many years.

In fact it's been pointed out that the only thing stopping the US going down like a stone during FC1 is all the drugs money being laundered through the Fed...

BillNovember 14, 2013 10:56 AM

@ Dirk Praet and Nick P

The problem is people aren't interested in the truth. They just seem to be happy being guided by the "one-eyed" monster and focused on the upcoming game.

cdmillerNovember 14, 2013 5:09 PM

Just happen to be reading Diamonds Are Forever where the mob covers up it's payoff of a smuggler (Bond) via a rigged horse race and a fixed blackjack game in Vegas...

BPNovember 15, 2013 12:25 AM

I think we should require the Supreme Court conduct their poker games, that are illegal but that they've written about in court opinions, at an online venue. Should bring them up to speed on digital technology.

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