The UK Gambling Commission has warned that AI tools are increasingly being exploited to bypass KYC checks and that B2B suppliers face mounting exposure to illegal gambling revenue.
The regulator published its updated money laundering and terrorist financing risk assessment for the sector on 30 July 2026, replacing the previous version issued three years ago.
The report reflects a rapidly changing industry landscape shaped by the AI revolution and the accelerating growth of illegal gambling operations across the UK.
The Commission stated: “The risk landscape faced by licensed gambling operators continues to evolve. Technology-driven advancements in particular pose new challenges, such as the rapid development in artificial intelligence capability which tests the effectiveness of customer due diligence controls.”
It added: “The growth of illegal gambling websites also exposes operators to illicit financial flows in their business-to-business relationships.”
AI-enabled identity fraud was singled out as a particularly significant emerging threat, with fraudsters deploying AI-generated false documentation, deepfake videos, and face swap technology to circumvent verification processes.
In a notable regulatory shift, the Commission raised the overall risk rating for gambling software suppliers, covering B2B online providers, from low to medium, marking the only such change in this updated report.
The regulator explained that this change reflects the risk of B2B software being sold to illegal gambling operators, something the suppliers themselves may not always be aware of.
The report noted: “The sale of software to illegal website operators may not be by a licensed operator directly but may result from insufficient monitoring of third-party contracts and activity.”
It also highlighted that gambling software businesses may receive funds through cryptoassets or from businesses offering cryptoasset activity, observed through both business relationships and investments.
Casinos operating as Money Service Businesses were introduced as a new high-level risk category, covering land-based sites where foreign players can use bank cards that may not otherwise be accepted in the UK.
AML and CTF consultant Nigel Harvey explained the significance of this risk, stating: “What the UKGC are basically saying is you don’t know what the source of these funds are – it could be easy to launder money this way.”
Harvey also welcomed the structural clarity of the new report, noting: “The Gambling Commission has separated what they consider to be supplier risks from operator risks, which is very helpful because that means operators don’t have to worry about ‘what should I write for this’.”
He further observed that the report consolidates guidance from multiple sources, saying: “They’ve brought in risks from other guidances into this risk assessment, so we’re slowly moving towards having everything in one place, which is helpful.”
Harvey also called for greater consistency in how the Commission applies compliance assessments, stating: “My hope is that the Gambling Commission’s compliance managers just develop a level of consistency when they assess operators.”
Anti-money laundering sources have suggested the updated assessment may also reflect preparations for an upcoming Financial Action Taskforce inspection, following a previous visit where the UKGC was praised for its robust controls.
