KYC in Online Casinos: A Complete Guide

AML and KYC in Online Casinos and Betting: What You Need to Know

November 14, 2023

Key takeaways

1. AML and KYC: Essential for Legality in Gambling: AML and KYC regulations are crucial for maintaining legality and security in the gambling industry.

2. Fraud Prevention: Identity verification helps prevent money laundering and fraud, protecting both users and businesses.

3. Enhanced User Experience: An effective KYC process can improve user experience, increasing customer trust and satisfaction.

4. Didit's Advanced Technology: Didit provides cutting-edge solutions in identity verification, using NFC technology, biometrics, and artificial intelligence.

The gambling industry has skyrocketed in recent years. Online casinos and internet betting have proliferated, albeit not without overcoming significant hurdles. Among the most crucial are those related to identity verification (KYC) and AML (Anti-Money Laundering) services, which might be bothersome for individuals but are essential for organizations to avoid fines or license revocations.

We delve deeper into these obligations in betting, the key points, and how to implement them while minimizing the risk of losing players.

What is AML in the Gambling Sector?

In betting and the gambling sector, AML (Anti-Money Laundering) regulations refer to policies taken to prevent money laundering and/or terrorism financing.

Why is this necessary? This sector often handles a significant amount of money, and it's not uncommon to see large sums moving from one account to another in seconds, making it attractive for those looking to launder money.

This usually happens in casinos, both physical and online. Large amounts of money, difficult to encounter in other everyday situations, come and go; the perfect opportunity for fraudsters to act.

What is KYC in the Gambling Sector?

In the online betting and casino sector, identity verification (or KYC, Know Your Customer) refers to a series of protocols and guidelines followed to authenticate an individual's identity. These checks, typically conducted by requesting various identification documents, occur during the onboarding process.

While the information individuals must provide can vary by legislation, it typically includes name, postal address, and age.

Why are KYC and AML Important in the Industry?

Complying with KYC and AML policies is crucial from both an industry and user perspective.

As mentioned earlier, any non-compliant industry entity could face substantial fines or even lose its license. While these entities aren't seen as direct participants in money laundering, they play a key role in this illicit activity.

From a user's standpoint, KYC and AML protect against cybercrime and suspicious activities, ensuring that everyone within the service is playing fairly.

What are the AML and KYC Requirements in the Online Betting and Casino Sector?

KYC and AML requirements can vary depending on location, so having an adaptable identity verification and KYC system is crucial.

Some of the main legal frameworks worldwide include:

  • Law 13/2011 on Gaming Regulation in Spain.
  • Bank Secrecy Act (BSA) in the USA
  • Anti-Money Laundering Act of 2020 in the USA
  • European Union’s Anti-Money Laundering Directive 6 (6AMLD) and its previous versions
  • Proceeds of Crime Act 2002 (POCA) in the UK
  • Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) in the UK

Pros and Cons of Identity Verification Procedures in the Betting and Casino Sector

While we've discussed KYC-related obligations in the gambling sector, it's fair to recognize that identity verification has its advantages and disadvantages for both service providers and individuals.

Benefits of Identity Verification

  • Enhanced security: One of the most obvious benefits is the increased security for both players and casinos. By verifying user identities, the risk of fraud and other criminal activities is significantly reduced.
  • Transparent transactions: Thanks to KYC, both players and casinos can have a transparent record of all transactions, simplifying the resolution of any disputes.
  • Improved user experience: By ensuring all players are legitimate, casinos can provide a better gaming experience, free from the risks associated with fraudulent players.
  • Legal compliance: This is a significant benefit for online casino operators, as adhering to KYC procedures helps them operate within legal parameters and avoid penalties ranging from fines to license revocation.
  • Increased trust: When a casino follows strict KYC procedures, it can serve as an implicit seal of approval for players, who will feel more secure depositing their money.
  • More effective promotions and bonuses: By knowing their customers better, casinos can offer more targeted promotions and bonuses, benefiting both the company and its users.

Disadvantages of the KYC Process

The identity verification process has some disadvantages for both individuals and organizations. The authentication process can be lengthy, particularly with manual and inadequate procedures that can lead to fraud. In this context, if your service hasn't heard of AI-generated fake documentation, this article is worth checking out.

Additionally, storing sensitive data poses privacy risks and, in extreme cases, could lead to identity theft. Hence, finding solutions that comply with current laws and address these less favorable aspects is crucial.

How Didit Assists in the KYC and AML Process for Online Casinos and Betting

Didit aids both individuals and organizations in the KYC and AML processes for online casinos and betting. For the latter, Didit Business provides a complete suite tailored to the specific needs of this type of business, not just with identity verification but also with our Unified Access solution.

Our identity verification technology relies on NFC technology, biometrics, and artificial intelligence, allowing us to read the chip of official documentation and verify that the person on the other side of the screen is real and is who they claim to be, thanks to numerous biometric patterns enhanced with AI. All this, in record time, with verifications that can be as quick as three seconds. You can test our technology in the following demo.

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For individuals, Didit offers a sovereign and reusable digital identity. What does this mean? Once you've passed the humanity test once, you can authenticate yourself in any service that integrates our technology with a single click, sharing the data and information you choose as an individual at all times.

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