The Banking Paradox: How Tier-1 European Banks May Be Enabling Illegal Offshore Casinos Through Transaction Laundering Blind Spots

Guest Contributor
Fri, 20 Mar 2026 08:18:56 +0000
Illegal gambling, Illegal Payment Services, ticker, AML, chargebacks, Illegal Gambling, ING, KSA, KYC, Mastercard, MCC Codes, Offshore Casinos, Payment Compliance, Rabobank, Shell Merchants, Transaction Laundering, Visa

While European gambling regulators intensify their crackdown on illegal offshore casinos, a more uncomfortable question is emerging for the banking sector: are major retail banks, through rigid chargeback practices and weak scrutiny of miscoded card transactions, helping illegal gambling networks stay operational? Complaints involving shell merchants, false MCC coding, and rejected disputes suggest a systemic compliance gap that deserves closer regulatory scrutiny.

Key Findings

Major retail banks may be processing card payments linked to illegal offshore casinos through shell merchants using allegedly false Merchant Category Codes (MCC).

Transactions that should raise immediate AML and card-scheme red flags can appear on card statements as “digital goods” or ordinary retail purchases rather than gambling activity.

Consumers who report the true gambling context of such transactions allegedly face dispute rejection, even where there are indicators of miscoding or transaction laundering.

This creates a perverse incentive structure in which accurate disclosure may reduce the chance of recovery, while generic “goods not delivered” complaints may have a better chance of success.

The alleged mismatch between internal bank dispute logic, card-scheme rules, and AML obligations deserves scrutiny by financial regulators, not only gambling authorities.

The Banking Paradox: How Tier-1 European Banks May Be Enabling Illegal Offshore Casinos Through Transaction Laundering Blind Spots

Across Europe, regulators are stepping up enforcement against illegal offshore gambling operators. National gambling authorities are issuing fines, publishing warnings, and ordering access restrictions against unlicensed casino websites targeting local consumers. Yet one critical question remains insufficiently examined: how are deposits to these operators still being processed so easily through mainstream banking channels?

According to information shared with FinTelegram, part of the answer may lie in the intersection of card acquiring, dispute handling, and compliance failures at major European retail banks.

The allegation is not that banks openly support illegal gambling. The more troubling concern is that some banks, including Revolut, may be structurally ignoring obvious warning signs of transaction laundering and merchant misrepresentation, thereby allowing illegal offshore casino ecosystems to continue operating in plain sight.

The Hidden Payment Layer Behind Illegal Gambling

When consumers deposit funds with offshore casinos, the transaction does not always appear as gambling. Instead, the charge may be routed through an intermediary merchant or shell company that presents itself as a software seller, digital goods provider, e-commerce business, or other innocuous commercial entity.

In such cases, the transaction may be processed under a Merchant Category Code other than the gambling MCC 7995. Market participants and affected consumers have repeatedly pointed to MCC 5816 and similar retail-oriented classifications as examples of how gambling-related payments may be disguised.

Regulators and supervisors already warn about illegal gambling payment risk, shell/sub-merchant opacity, and transaction laundering. What remains insufficiently addressed is the specific role of false or misleading MCC allocation in helping those flows evade bank controls (read also “Gambling and Gaming Good Practices for Payment Institutions and Good Practices Sub-Merchants published by the Dutch DNB).

From a compliance perspective, that is not a minor technical issue. If a gambling transaction is deliberately disguised through a false merchant identity and misleading MCC coding, this may amount to transaction laundering. It is also a serious AML, KYC, and card-scheme risk indicator.

Why the Chargeback Process Matters

The compliance issue becomes especially visible when the consumer later tries to dispute the transaction.

A typical scenario described to FinTelegram is this: a consumer deposits funds with an offshore casino, later loses access to the account, faces withholding of winnings, or discovers that the merchant description on the card statement does not match the actual service received. The consumer then approaches the issuing bank to request a chargeback.

At that point, the dispute is allegedly assessed not through the lens of merchant misrepresentation, transaction laundering, or scheme-rule compliance, but through a simplified internal script: the customer intended to gamble, the funds reached the casino environment, therefore the service was rendered and the dispute is rejected.

The problem is not merely poor customer service. This approach indicates a deeper structural failure: the bank may be refusing to examine whether the named merchant was false, whether the MCC was manipulated, whether the acquirer onboarded the merchant properly, and whether the entire payment chain was designed to circumvent gambling controls.

The Compliance Red Flags Banks Should Not Ignore

From an AML and card-compliance perspective, several red flags should trigger enhanced scrutiny:

1. Merchant-description mismatch

The merchant shown on the statement allegedly does not correspond to the casino brand actually used by the consumer.

2. Suspicious MCC allocation

The payment may be classified as digital goods, software, or general retail rather than gambling, despite the underlying transaction being casino-related.

3. Use of shell entities

The named merchant is often an obscure corporate vehicle with no meaningful public-facing commercial activity consistent with the transaction description.

4. Dispute logic detached from merchant truth

Instead of examining whether the transaction was honestly represented, banks may focus only on the consumer’s subjective intent to gamble.

5. Possible scheme-rule avoidance

Where acquiring-side documentation, merchant identity, and service representation do not align, the matter may implicate card-scheme compliance, not just customer dissatisfaction.

These are not exotic issues. They go to the heart of AML controls, merchant due diligence, and the integrity of the card-payment ecosystem.

The Perverse Incentive: Honesty May Hurt the Consumer

Perhaps the most disturbing aspect of the allegations is the incentive structure they create.

Consumers report that when they fully explain the offshore casino context in an attempt to expose merchant deception, the bank may reject the dispute on moralistic or policy grounds linked to gambling. However, when the same transaction is framed in generic commercial terms — for example, as software or digital goods not delivered — the dispute may have a better chance of succeeding, simply because the shell merchant cannot prove delivery of the supposed product.

This suggests a highly problematic outcome: banks may be encouraging concealment while discouraging honest reporting of suspicious payment conduct.

In other words, the system may be better at processing simplified consumer scripts than at confronting potential transaction laundering.

A Regulatory Blind Spot Beyond Gambling Enforcement

This is why the issue should not remain confined to gambling regulators.

Authorities such as the Dutch KSA, the UK Gambling Commission, and other national gambling watchdogs can act against unlicensed casino operators. But they do not supervise the internal dispute-handling logic of major retail banks. That is where financial regulators and AML supervisors enter the picture.

The real compliance question is whether retail banks and their card-dispute departments are sufficiently trained, required, and incentivized to identify transaction laundering indicators when consumers present evidence of merchant mismatch, false MCC coding, and shell-company routing.

If not, banks risk becoming passive infrastructure providers for illegal gambling networks while publicly maintaining zero-tolerance rhetoric.

Read our report on Revolut and the Norway situation here.

Why ING, Rabobank, and Other Banks Deserve Closer Scrutiny

The institutions mentioned by the source — including ING and Rabobank — are not singled out here as proven wrongdoers. However, they are cited as examples of major banks whose internal handling of such cases deserves closer examination.

For FinTelegram, the central question is whether the alleged failures are isolated case-management problems or signs of a broader structural pattern across European consumer banking.

If dispute teams systematically ignore transaction laundering indicators because the underlying consumer activity involved gambling, that would represent a serious governance issue. It would also raise questions about how banks interpret their obligations under AML frameworks, card-scheme rules, and consumer-protection standards.

FinTelegram’s Preliminary Assessment

The allegations presented to FinTelegram point to a potentially important enforcement gap at the intersection of illegal gambling, acquiring, retail banking, and card-dispute operations.

Even where a consumer knowingly engaged with a gambling website, that does not eliminate the need to examine whether the transaction was deceptively presented, processed through a false merchant, or intentionally miscoded to bypass controls. A bank that refuses to engage with those elements may be overlooking precisely the kind of conduct that AML and card-compliance frameworks are meant to detect.

This is not merely a consumer-rights issue. It is a potential payment-integrity issue.

Call for Whistleblowers and Insiders

FinTelegram is investigating how banks, acquirers, PSPs, and card-dispute departments handle suspicious card transactions linked to illegal offshore casinos, shell merchants, and false MCC coding.

We invite insiders, compliance officers, former dispute-team staff, acquirer employees, payment specialists, and affected consumers to share information, documents, merchant descriptors, chargeback correspondence, or internal guidance through our whistleblower platform, Whistle42.

If you have evidence of transaction laundering, miscoded gambling transactions, shell merchants, or internal bank policies that systematically ignore these red flags, please submit your information securely and confidentially via Whistle42.