Recently, a banker spoke about his knowledge of some online gambling operations laundering money. This came out during a conference on anti-money-laundering that took place in Las Vegas. The banker was Cathy Scharf, who is a compliance officer, and she spoke in front of many banking colleagues who showed varying degrees of shock. She spoke about her own experiences in a Utah bank in which she says at least $200 million were illegally processed for the gambling sites Full Tilt Poker and PokerStars. Both of these are offshore entities.
According to Scharf, her supervisors informed her that the bank needed to perform these services, illegal as they were, in order to remain solvent. They told her that the bank had to have this income and that they then brought in criminal lawyers who she said threaten her with arrest in the event she informed on the bank.
Instead of being intimidated, Scharf went to federal regulators and began working with them. They were able to expose SunFirst Bank’s relationship with the poker sites. She went on to say that there may be many other banks who are doing the same thing with offshore gambling operations.
For their part, her colleagues supported her actions. They did express some concern, however, on how the government will protect her, if that need arises. She told the audience that it only took one week for her to realize that her employers were dealing in illegal business and doing so in a big way. According to her, the bank made little effort to conceal its dealings from her.
The scheme was fairly simple. When a person who was gambling on these sites transferred money to one of the offshore card sites, that money came through the Utah bank where she worked. According to her, this bank was earning about $400,000 a month just in transaction fees. This is a violation of the 2006 law which states that it is a federal crime to accept payments if those payments are for illegal internet gambling.
Scharf went on the say that with the help of her colleagues she was able to hire a lawyer. She began writing down what she saw in a diary, and she started working with the federal authorities. She said she was often afraid during this time. The vice chairman of the bank went to prison in 2012 for his role.
Because of her actions, there are new policies being put into place to help stop this type of illegal behavior. Also the FDIC is now looking more closely at certain types of transactions. Her work is being seen as being very valuable in identifying some of the problems that regulators have been facing.
To date, no other news concerning any pending legal action against the bank or its officials is available. Also, no comment was put out by either offshore poker site (Poker Stars or Full Tilt Poker), both of which have had their share of problems in the past with other issues.