KYC and AML in the Online Gambling Industry

Casinos and gambling businesses have always been regarded as high-risk clients in the banking world. First of all, a great deal of casinos used to be owned by mobsters, and weren’t tightly regulated as they are today. As a result, they have been associated with organised crime for a long time. Second, even if the casino is fully legitimate people can still take advantage of the system to launder money. This is because you can always state that the origin of funds comes from gambling. 

Because it’s in everyone’s interest that these businesses are up and running, casino owners need to be compliant with strict regulations. This ensures that everyone is safe and that players can easily withdraw their legitimate winnings. However, compliance includes gathering and analyzing KYC documents, and many gamblers aren’t comfortable with sharing sensitive information. This is one of the reasons why no verification withdrawal casino sites have become such a big hit. Almost any operator will require you to submit documents if you wish to withdraw funds. But, if you are using blockchain payments, then this step isn’t really necessary. 

Still, KYC and AML undoubtedly make online gambling safer. Here we will talk about these regulations and how they can become more efficient. 

KYC in the Online Gambling Industry

If you read the terms and conditions in online casinos you will see there is a section dedicated to KYC documents. In essence, these are documents used to confirm your identity and whereabouts.

• Passport
• ID
• Driver’s license
• Copy of a utility bill
• Copy of bank statement

Because this is sensitive information players aren’t always comfortable sharing these docs. Luckily, casinos are obligated to use industry-standard encryption and make sure the user information is protected. They also use other tools to prevent fraud and to help them stay compliant. The reason documents are necessary is because payment providers need to verify the recipients and because casinos cannot offer services to players who are underaged. 

Technology Enhancing KYC Processes 

We are now seeing that machine learning technology can be leveraged to streamline processes in many industries. With AI-assisted KYC software, it should be possible to streamline KYC profiling. The program can immediately recognise what type of document has been uploaded, as well as the language that is used on that document. This would tell it which database needs to be searched, to verify someone’s identity, address, and validity of KYC documents. 

The real goal here is to ensure that clients are not blacklisted by the authorities or to be extra careful if you are doing business with a politically exposed person. People who were involved in financial crimes or fraud are blacklisted, and the software needs to cross-reference the documents with that list. 

AML Measures

Much like bank and non-bank financial institutions, gambling businesses need to monitor and report suspicious transactions. In other words, their payment processing software and staff need to be trained on how to spot suspicious activity. This doesn’t mean the transactions are put on hold until the casino investigates them, it can simply mean they flag the money transfer they deem suspicious. They also have certain transaction limits in place that ensure that a high volume of funds cannot be moved at once. 

Technology Enhancing AML Processes

Much like with KYC, financial institutions can use AML software to help them spot suspicious transfers. Not all suspicious transfers are criminal activity, but they need to be checked and cleared if they resemble criminal activity. AI can once again be trained to spot suspicious transfers. 

• If someone is constantly withdrawing funds that are close to the permitted withdrawal limit.
• A sudden and drastic change in transfer volume
• Depositing a lot of money into casino accounts and then gradually withdrawing without playing

If the transfer is deemed suspicious and flagged the next financial institution in the chain of transfer can do the same. Then through information sharing authorities can trace that cash to its final recipient and look into it. 

Conclusion 

This only goes to show that online casinos that perform due diligence on their users and collaborate with authorities are safer. So, you should always look for an online gambling site that is licensed and regulated. However, you should still be mindful of excessive KYC policies. It’s one thing if your identity and address need to be confirmed, and it’s completely different if someone is using the opportunity to gather as much as possible. After all, we live in a world where user data is often sold to data brokers, and some businesses aren’t always transparent about how they handle user data. So, don’t be afraid to ask questions.