Know Your Customer

KYC is a set of practices to clarify a player’s identity unequivocally. It’s also part of a broader anti-money laundering (AML) policy. Also called ‘enhanced due diligence’, KYC is a mandatory ID verification step in any online gambling platform. So, every online casino or sports betting site must abide by it. Enhanced due diligence isn’t too popular among online gamblers. This step might take some time and requires the upload of several documents.

Yet, it’s there for players’ protection. KYC helps online gambling platforms to identify suspicious players and stop them right at the doorstep. It also helps prevent underage gambling and players trying to operate different accounts, on top of financial crimes. Additionally, it prevents banned players from rejoining the platform.

So, it’s an important security measure for the players and the house. Besides, financial crimes know no boundaries, so it’s an internationally reinforced practice. It may vary according to the country. This means that every player must follow local rules, even while playing abroad. Even more lenient jurisdictions like, let’s say, Costa Rica, must follow UK rulers when catering to British gamblers.

Here are the most demanding jurisdictions at the moment.

United States

Every gambling institution with annual gross revenue above USD 1 million is considered an NBFI (non-bank financial institution). As such, they’re monitored by the FinCEN (Financial Crimes Enforcement Network). The FinCEN handles the application of AML regulations. These regulations impose gambling institutions, like online casinos and sports betting sites, to report any suspicious activity via Suspicious Activities Report (SARs).

Monitored activities include transactions over USD 5,000 and any currency transaction above USD 10,000. Receipt storage and recordkeeping are also closely followed by the FinCEN. The American Gaming Association has recently changed its rules. Now, it demands that every player should at least provide a legal name, Social Security number and a valid address.

United Kingdom

The UK Gambling Commission is stringent about ID verification and KYC/AML practices. Based on the Proceeds of Crimes Act, the government focuses on three primary goals. Firstly, there’s money laundering. However, it also aims to prevent underage gambling and self-excluded gamblers from returning.

Additionally, it keeps an eye on risky candidates that may be under sanctions or hold influential positions. Other jurisdictions only apply KYC when a customer wants to make a banking operation. Meanwhile, UK laws demand KYC to be applied immediately upon registration.

European Union

There are mainly two laws supporting enhanced due diligence. These are the Prevention of Money Laundering Act from Malta and the EU 4th Money Laundering Directive. European and British laws differ regarding when KYC procedures should be applied. According to the EU’s laws, such procedures should only be applied upon a deposit or withdrawal. In fact, no transaction under EUR 2,000 is enough to trigger them.

There’s no such a thing as a standardised list of documents for opening an online casino or sports betting account. However, you’ll need to provide unequivocal proof of identity, proof of address and a payment ID. It turns out there are several documents that can be used:

• Proof of Identity: driver’s licence, passport, National Identity Card, voter’s card, university ID and more.
• Proof of Address: bank statement, mortgage statement, house deed, a recent utility bill, council tax bill and more.
  
• Payment ID: copy of the card used, bank statement and e-wallet verification.
  

Online gambling platforms, like online casinos and sports betting sites, deal with large sums of money daily. It means they’re juicy targets for all sorts of scammers and fraudsters. Keeping them outside isn’t only crucial for the business, it means a lot for customers’ security. Malicious players who have been already banned from other platforms won’t threaten other players if they aren’t allowed in.

If complying with enhanced due diligence can be costly, not doing so can be costlier still. ING, a Dutch bank, had to pay USD 900 million for not meeting the Dutch AML standards. It can be incredibly costly for players, too, who are on their own, without anyone protecting their player rights. If a platform doesn’t follow KYC rules, there’s no way of telling if it’s committed to data safety or how it’ll handle your confidential information.

How To Speed It Up

Several companies are now offering the possibility to shorten the distance between the online player and the virtual tables. Such companies offer an alternative to manual ID verification without giving up data safety and protecting player rights concerning confidential information.

In some cases, these companies store the customer’s banking KYC data and use it to log in on different platforms. The principle behind the service is simple: why repeat the same process over and over? Services like Pay’n Play are becoming more popular worldwide, so there’s still a huge market for them.

Manual verification of enhanced due diligence documents can take ages. Worse still, this procedure follows no standard. As a result, the customer may have to upload different documents repeatedly. Such a situation has understandably raised concerns about online security, data safety and how such platforms deal with confidential information.

Another side effect of this clunky process is that many players just can’t wait for it and go risk their money on less trustworthy sites. Why would a counterfeited casino adhere to enhanced due diligence, anyway? Indeed, the cost of following KYC/AML isn’t neglectable. Almost 70% of online casinos and sports betting sites reported a 74% average KYC/AML budget increase.

Many gambling institutions must hire an officer for reporting money-laundering practices. In some cases, a team of officers must be hired. Failing to do so can have consequences like legal prosecution.

Online casinos and sports betting platforms are obligated by law to collect relevant information about any customer. However, these platforms must also be committed to player rights regarding data safety, online security and the safe storage of confidential information. The best platforms are completely transparent. There, you’ll have sections detailing issues such as cookies policy and, in some cases, editorial responsibility.

Anyway, no customer should have any confidential information disclosed to any third party. Infringing the player’s rights can have dire consequences on any platform, from fines to closure. The documents supplied to online casinos and sports betting should never be used for other purposes than ID verification.

KYC/AML practices may feel like a killjoy for those eager to hit the tables, but they’re essential for their own security. These practices also safeguard player rights. No online casino or sports betting site is allowed to make commercial use of the confidential information of any customer.

The best platforms will always have a section detailing their cookies, data safety and player rights policies. If the platform also offers gambling-related information, such as reviews and tips, it’ll also have an editorial responsibility section.