Money Laundering Scheme via Online Gambling: How Cybercriminals Cover Their Tracks

How the Scheme Works

Bengaluru police in India uncovered a large-scale scheme involving money laundering through online gambling.

Cybercriminals involved in investment scams transfer stolen funds to betting platforms.

There, the money is disguised as gambling winnings, making transactions harder to trace.

The scheme operates as follows:

• Fraudsters deceive victims under the guise of profitable investments.
• The acquired funds are deposited into virtual gambling app accounts.
• The money is split across multiple bank accounts via mass payouts.
• Funds are then converted into cryptocurrency, primarily USDT.

Example: nearly $24,000 (about 2 million rupees) was broken into 600–800 transactions of $24–30 or Rs 2000–2500 using a “single withdrawal – multiple credits” scheme.

How Tracks Are Covered

Payments are routed through:

• QR codes
• Virtual betting accounts
• The “SDMC” system (Single Debit Multiple Credit), where one amount is split into multiple deposits

This approach makes it nearly impossible to trace the origin of the funds. Often, the money ends up in the accounts of unsuspecting “winners,” whose accounts are then frozen.

Revenue Distribution

After examining the operations of illegal platforms, police identified an approximate distribution of income:

These figures point to the high profitability of the scheme. Moreover, some groups reportedly received official authorization from the Reserve Bank of India to use legal payment services, enabling them to legitimize their operations.

Conclusion

Online gambling is becoming an increasingly convenient platform for money laundering. Through the use of cryptocurrency, QR codes, and mass payouts, fraudsters effectively conceal their tracks, while victims often remain unaware that their information is being used in a criminal scheme.