Safeguarding iGaming Through KYC

Resources  /  Published 03 Jul 2021  /   / 

It’s a well-known fact that online gambling platforms turn over millions of dollars every single a day. With so many large-scale transactions happening on a daily occurrence, the iGaming industry has become a target for money laundering and financial crimes. This is further exacerbated by the relative anonymity the online world offers users. With no face-to-face interactions, experienced fraudsters are constantly attempting to dodge or deceive identity verification checks to bet on gambling sites without detection.

As more regulation comes into force across the iGaming industry, betting brands are facing increased scrutiny with regards to their Know Your Customer (KYC) compliance programmes. It is through implementing strict KYC checks that online casinos can flag fraudsters from the outset and mitigate the risk of becoming vehicles for money laundering.

iGaming KYC | Trifecta DirectoryWhat is KYC?

Know Your Customer (KYC) compliance programs are a set of customer due diligence controls, which have become a regulatory requirement in the iGaming industry. Companies must weed out fake user profiles created on their sites to illicit laundering of funds, which is a common occurrence. By implementing various identity checks, iGaming companies can prevent such fraudulent activity.

As such, KYC checks are carried out at every stage of the operational cycle: from a new player’s initial sign up, to their ongoing deposits and payouts, as well as during the reactivation of inactive players. Typically, KYC checks will consist of three stages: a Customer Identification Program (CIP), Customer Due Diligence (CDD) and a strategy for ongoing monitoring. Through these checks, gambling brands are verifying their users’ identity, age, location, and source of funds, among other categories. In the process they can identify suspicious actors and high-risk fraudsters looking to slip through the system and carry out illicit activities, such as laundering money and assimilating funds for terrorist organisations.

iGaming companies who fail to maintain these checks could face serious consequences, including licence revocation, fines, financial liability, and major damage to a company’s reputation.

How AI solutions are improving KYC Compliance

Increasingly, iGaming is looking towards digital and AI solutions to improve their KYC procedures and become more effective at detecting fraud. The benefits of AI within compliance include automating workflows and the ability to quickly analyse swathes of data accurately and efficiently. This means that data can be transferred in real-time with little need for manual intervention, saving the company on hours of verification checks per user.

Some popular AI innovations in KYC include:

  • Enhanced Due Diligence: AI-assisted Enhanced Due Diligence provides an increased level of scrutiny of high-risk or high-net worth customers and large transactions. Such systems track behaviours and patterns through obtaining the customer’s identity and address, and evaluating the risk category of the customer. EDD highlight risks that cannot be detected by regular customer due diligence procedures and provides companies better insight into their client base.
  • Document Management Automation: With more AML regulation coming into force across the industry, client onboarding is becoming increasingly complex. Companies must invest time and money in processing identity checks manually. AI-based KYC verification streamline the process by using machine learning technologies to ensure clients face regulatory standards without a high dependency on internal resources, all of which is achieved at a fraction of the cost.
  • Regulatory Change and Compliance Management: Whenever a new or updated regulatory and compliance document is published it is typically a vast and very complex piece of text. AI has an impressive ability to detect patterns in such texts to form an understanding of the ever-changing regulatory environment. This means that AI systems is becoming better at examining and classifying documents as well as extracting the key information to keep companies up-to-date with regulatory changes and ensure they are adequately adapting their KYC procedures in the process.

iGaming sites continue to improve upon their KYC programs to offer more secure user security protocols. Implementing comprehensive and accurate identity verification procedures will ensure that iGaming sites stay on the right side of the law, minimise money laundering and fraudulent activity across different jurisdictions, and safeguard the industry in the long run.