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The UK Gambling Commission (UKGC) has increased the money laundering risk rating for gambling software suppliers from low to medium in its 2026 Money Laundering and Terrorist Financing Risk Assessment, highlighting concerns around business-to-business relationships, illegal gambling operators and cryptoasset exposure.
The regulator published the updated assessment on July 30, 2026, following a review of risks affecting the British gambling sector. The report identifies changing threats linked to technology developments, financial flows and the increasingly complex supply chains used to distribute gambling software.
Gambling software is the only sector included in the assessment that received a revised overall risk rating compared with the previous review. The Commission said the increase reflects risks created when licensed suppliers provide products to illegal operators, either directly or through third-party arrangements.
Software Supply Chains Create New Oversight Challenges
The regulator said business-to-business relationships have become a growing area of concern because software providers may lose visibility over where their products eventually appear.
Licensed suppliers can distribute games and other technology through multiple commercial partners, including resellers and international businesses. According to the assessment, insufficient monitoring of third-party contracts and activity may allow software to reach unlicensed gambling websites.
The Commission noted that cross-border arrangements involving several parties can create additional opportunities for money laundering risks.
The assessment lists inadequate due diligence checks on business-to-business customers and test houses as a high-risk vulnerability. It also identifies insufficient monitoring of third-party contracts to detect software resale to illegal sites as a new risk area.
The regulator said gambling software companies may also receive funds connected to cryptoasset activity through business relationships or investments.
The report states that cryptoasset transactions represent a new risk category for the sector, with the likelihood of occurrence rated medium and the potential impact rated high.
Artificial Intelligence Adds Pressure To Customer Checks
The wider assessment also highlights technology-related challenges affecting gambling operators, particularly the use of artificial intelligence to bypass customer verification systems.
The Commission said operators are facing increasingly advanced attempts to avoid know-your-customer procedures, including AI-generated documents, deepfake videos and face-swapping technology.
“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.
“The growth of illegal gambling websites also exposes operators to illicit financial flows in their business-to-business relationships.”
The regulator said these developments create additional pressure on existing customer due diligence controls, which are used to confirm customer identities and assess whether funds may be linked to criminal activity.
The assessment also identifies casinos operating as Money Service Businesses as a new high-level risk area. This relates to situations where land-based casinos provide payment services that allow overseas customers to access funds for gambling.
AML and CTF consultant Nigel Harvey said such arrangements create questions around the origin of money entering gambling venues.
“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.”
Industry Calls For Greater Consistency In Compliance Approach
The updated assessment maintains high-risk classifications for sectors including remote casinos, betting operators and bingo businesses, while other areas retained their previous ratings.
Terrorist financing ratings across the gambling industry remained unchanged at medium. The Commission said the likelihood of terrorist financing remains low, but the potential consequences are severe enough to maintain the overall rating.
Harvey said the latest assessment provides clearer separation between supplier-related risks and operator-related risks, helping businesses understand their individual compliance responsibilities.
“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’.
“And the second thing as well is 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 said consistency among regulatory assessments remains important.
“My hope is that the Gambling Commission’s compliance managers just develop a level of consistency when they assess operators,” Harvey continued, outlining that managers’ approaches have differed individually in the past.
Although gambling software suppliers are not regulated under the UK Money Laundering Regulations in the same way as operators, the Commission said they remain subject to expectations linked to preventing crime within the gambling sector.
Software companies must also consider obligations under the Proceeds of Crime Act 2002 and the Terrorism Act 2000.
The report follows broader government efforts to address illegal gambling activity. The UK Government has committed £26 million over three years to strengthen action against unlicensed gambling operations, with enforcement efforts extending across wider supply chains.