Wednesday, July 24, 2024

The National Bank of Ukraine has revealed a multi-million scheme of gathering payments for illegal gambling and illegal betting through the payment system “Leo”

The National Bank of Ukraine conducted an audit of the financial company FC Leogaming Pay LLC for 2019 and 2020, which owns the brand of the international payment system Leo, a non-bank financial institution licensed by the National Bank of Ukraine to transfer funds in national currency without opening accounts. According to the regulator, the company does not provide the NBU with reliable information on all financial transactions.

According to the audit results, in May-December 2020 alone, the participants of the international payment system “Leo” made financial transfers in the amount of over UAH 462 million for the “sports poker and e-sports tournament” service. The major share of these funds (56.6%) went to the accounts of Digispace LLC (on behalf of illegal online casino Cosmolot brand at the time of the inspection) and Redsin LLC (on behalf of the illegal online casino 1xbet brand).

Also, regulator detected miscoding: more than 90% of financial transactions using Visa and Mastercard initiated by payment cards holders on the resources of LLC FC “LEOGAMING PAY» are assigned as High-Risk Merchant Category Code 7994 – Video Games, that is used to legalize money from illegal gambling.

According to the State Register of Legal Entities, Digispace LLC and Redsin LLC have never organized sports poker and eSports tournaments. Instead, they entered a different business profile in their registration documents – “computer wholesale”.

Which companies received funds for the “sports poker and e-sports tournament” under the Leo payment system?

Service provider Amount of funds received, UAH million * % of the total amount of funds
LLC “Digispace” 254,2 55
Whitehall LLC 65,7 14,2
Melbron LLC 80,6 10,4
Vimes LLC 26,9 5,8
Celios LLC 26,6 5,7
Redsin LLC 7,4 1,6
Neuron Gold LLC 0,0495 0,0001
Clarity Trade LLC 0,3441 0,0007

* for the period from May 14, 2020 to December 10, 2020

However, according to the Ministry of Youth and Sports of Ukraine, in accordance with the rules of sports competitions in the sport of “sports poker”, online tournaments are not provided at all. And according to the Unified Plan of Physical Culture and Sports Activities of Ukraine for 2020, in the field of sports “sports poker”, poker tournaments were held only offline from January 26 to February 3.

At the same time, payments with the purpose of “sports poker and e-sports tournament” were received through FC Leogaming Pay throughout 2020.

The transfer of funds was carried out by six acquiring banks, which ought to control the prevention of the miscoding scheme (a separate type of fraud in the banking acquiring network, which consists in substituting the purpose of payment) during financial transactions.