As we all know, iGaming platforms cater to millions of players who play across multiple platforms worldwide regularly. The majority of these platforms deal in real-money games, with numerous financial transactions occurring daily. When such a scale of real money is involved, it is vital to maintain trust and transparency. That’s where KYC (Know Your Customer) and AML (Anti-Money Laundering) policies come in.
These are not just basic requirements but important safeguards that protect your platform, your players, and the reputation of the iGaming platform.
Now that we understand the importance of KYC and AML, let us explain what they entail, their significance in the online iGaming industry, and the steps every iGaming operator must take to comply with regulations.
What is KYC (Know Your Customer)?
KYC, or Know Your Customer, is the process of a player’s identity verification after they create an account with the iGaming platform and before they can deposit, play, or withdraw money.
The main goal of KYC is to prevent:
Identity breach: Players’ accounts and their money remain secure, and this also prevents players from creating accounts with fake IDs.
Underage gambling: With KYC verification, any players who are under the allowed age for gambling will be unable to create an account.
Fraudulent accounts: Stops scammers from creating multiple or fake accounts to exploit bonuses or manipulate games.
Money laundering: Ensures that no player is involved in illegal financial activities or money laundering.
To put it in simple words, KYC ensures that only genuine and verified players use your iGaming platform.
Also Read: How to Prevent Cheating in Online Poker
What is AML (Anti-Money Laundering)?
AML stands for Anti-Money Laundering. These are the rules and procedures that stop criminals from using your iGaming platform to launder their money, which they have earned from illegal activities.
Money laundering mostly happens when players deposit illegal funds, play a few games on the platform to disguise their money, and then withdraw it as legitimate winnings.
AML policies require platforms to monitor and report suspicious transactions that don’t fit a player’s usual activity. This ensures that your iGaming platform remains transparent, secure, and free from misuse.
Why KYC and AML Compliance is Crucial for iGaming Platforms
Legal Requirement: The majority of iGaming jurisdictions, whether it’s the UK, Malta, Curacao, or others, require iGaming operators to follow strict KYC and AML laws. Not complying with these rules can lead to heavy fines, license suspension, or even permanent bans.
- Fraud Prevention: Verifying every player’s identity helps in preventing fraudulent behavior like chargebacks, account breaches, and fake player registrations.
- Responsible Gaming: KYC ensures age verification, so that no underage user can play on the platform. This aligns with responsible gaming laws and protects vulnerable players.
- Trust & Credibility: A iGaming platform with a transparent verification process and monitoring systems gains more credibility and is highly likely to be trusted by all players.
- Data Protection & Financial Security: KYC and AML systems often include encryption, secure document handling, and transaction monitoring. This keeps player data and funds safe from external cyber attacks.
The KYC Process in Online iGaming Platforms
Implementing a KYC process involves several key steps. Here is its breakdown:
- Player Registration: When a user signs up, they must provide basic personal information, such as:
Their full name, date of birth, complete address, email address, and contact number.
This data helps to verify a player’s identity digitally.
- Document Verification: Before allowing players to make deposits or withdrawals, players must upload their identity documents, which may include:
- Government-issued ID, such as a passport, driver’s license, and local government IDs.
- Address proof such as a utility bill, bank statement, or rental agreement.
- Live video verification or a selfie may also be required as part of the document verification process.
- Ongoing Verification: KYC should not be limited to a one-time process.
Platforms should get players to re-verify their identities from time to time, especially if:
- There is a noticeable change in the transactions of a player.
- There are multiple login failures or a change in the player’s device.
- A player starts making unusually high amounts of deposits and withdrawals.
The AML Process for Online iGaming Platforms
While KYC focuses on verifying player identity, the focus of AML policies remains on tracking and analyzing player behavior and transactions to detect any suspicious activity and money laundering.
1. Transaction Monitoring: All deposits, withdrawals, and in-game transfers are continuously tracked to detect any unusual patterns such as:
– Small deposits but large withdrawals: When a player makes a small deposit, which is followed by a large withdrawal, and such activity happens repeatedly on the same account.
– Multiple accounts but same payment source: Same payment source being used to make deposits on multiple accounts can also be a strong indicator of malicious activity.
2. Risk-Based Approach: Suspicious accounts can be assigned risk levels (low, medium, high) based on parameters such as location, playing behavior, and volume of their transactions. High-risk profiles must undergo further KYC checks and manual investigation before they are cleared to resume.
3. Reporting Suspicious Activity: Every licensed iGaming platform needs to have an internal system for Suspicious Activity Reports (SARs). If any suspicious behavior is detected across the platform, it must be reported to the relevant gaming authority for further investigation.
4. Record Keeping: As per the AML laws require platforms are required to maintain detailed transaction records and verified identities for a specified minimum number of years, so that these records can be produced when requested by regulatory authorities or at the time of audits.
Key Elements of a Compliant KYC & AML Policy
To stay compliant and safe, your iGaming platform should include the following elements in its KYC & AML Policy:
Customer Due Diligence: The platform must collect and verify the identity of every player before allowing them to transact on the platform.
Enhanced Due Diligence: Foolproof checks should be applicable to all high-risk accounts, especially for players from those countries that have weak AML regulations.
Risk Assessment of players: The operators should make optimal use of analytics and player behavior data to rate the level of risk associated with those accounts.
Constant Monitoring: Every financial transaction should be closely monitored on the iGaming platform, and any unusual activity should be flagged.
Data and Privacy Protection: All the data of players should be stored securely in compliance with the General Data Protection Regulation (GDPR) or other regional data protection laws.
Employee Awareness: The relevant set of employees should be educated on how to identify suspicious activity.
Reporting Process: The operators should have a clear internal process for escalating suspicious cases to the higher authorities.
Best Practices for iGaming Platforms
Here are a few highly recommended practices that should be followed by iGaming operators:
Automated KYC Solutions: All platforms should integrate APIs from trusted verification providers for a smooth and instant verification process.
Two-Factor Authentication (2FA): 2FA must be enabled for every account, as this provides an extra layer of security to the players’ accounts.
Transaction Limits: There should be a limit to the daily deposits, and the withdrawals should be disabled until the KYC of the player is fully verified.
Monitor IP and Device Fingerprints: This should be done to identify multiple accounts from the same device or network.
Updated Policies: Stay updated with the AML and data protection laws and jurisdiction-specific requirements, as they often change.
The Bottom Line
For operators, KYC and AML compliance are vital pillars of a trustworthy gaming environment and should never be ignored.
Having a strong KYC and AML system not only protects your platform from fraudulent and criminal activities but also helps build credibility among players. Efficient compliance policies will ensure that your business stays secure, legal, and future-ready.
