Financial crime-related risks are growing in igaming, with the number of audits made by regulators increasing at a commensurate rate. The pain point is the fines and penalties imposed on businesses that do not meet ever-changing AML requirements, with the US seeing a particularly large number of fines.
Julia Panina, Head of Demand Generation at EvenBet Gaming, explains how those operators that invest in reliable security and full compliance with Know Your Customer (KYC) requirements will be in a prime position to reap the rewards, particularly in newly-regulated and expanding markets like the US.
The US continues to present massive opportunities for the igaming sector, but as with any new-regulated environment, operators and suppliers alike need to move cautiously to avoid falling foul of the peculiarities of the fresh landscape. The high rates in certain states are a good example and so is the large number of fines that we see compared to other countries.
This is largely because of the national KYC and anti-money laundering policies and, as a result, the number of incidents investigated and the fines imposed are closely related to the maturity of the financial crime investigation system. The US is well-known for its strict system of taxation and finance monitoring, so it doesn’t come as a surprise that almost every case of breaking the numerous rules becomes a reason for a fine. At the same time, the states, in general, have a lower level of personal data protection practices implemented, as opposed to Europe with a GDPR. Therefore, providing complete KYC data now and then might feel risky for the customers and players.
The situation where every state has its own online gaming regulation and cross-state traffic is prohibited is another risk factor that could lead to receiving a compliance-related fine. Accepting a player from another state without verifying their location is enough to warrant this.
KYC technology is critical for state-level regulation compliance. Accepting players from other states might lead to grave consequences for an operator, from a huge fine to a costly license being revoked after numerous violations. So geographical identification, on top of the usual personal data and financial transparency, plays a vital role.
Even if a provider isn’t a specialist in KYC technology, they must be ready to offer a comprehensive service via a third party to ensure their customers feel safe, ideally with their choice of API. This means that operators aren’t limited in terms of the technology they want to use. On the contrary, many need specific solutions, for example recognizing non-Latin characters or even hieroglyphs, adding a video or 3D identification, and working with a wide range of documents for verification.
On top of that, EvenBet Gaming has developed a proprietary system of threat alerts to identify suspicious accounts, games, and transactions. Over the last year, we have done a lot in this arena, and now we have a dedicated team enhancing our anti-fraud module.
Poker stands apart
It’s fair to say that online poker is something of an outlier among gambling activities as far as this goes because users are playing against each other and not against the casino. A user gets money from another user, while an operator offers a space to play and earns a rake from their games. That is the reason why online poker is considered a riskier vertical in terms of anti-money laundering. In case of the negotiated play or using multiple accounts, it’s relatively easy to transfer money to another person with relatively low risks.
Of course, both online poker software and KYC solution developers are fighting against these risks. We are constantly improving our anti-fraud system that can identify multi-accounts based on IP, the device being used, and location among other factors, and report any suspicious behavior. We offer operators the ability to set checks and limits to money withdrawals, integrating these features with automated or manual KYC procedures. We recommend using trusted and compliant KYC solutions; for players, passing through several verifications might seem annoying, but an operator can always offer a bonus or an award. Ultimately, it’s in their interest to lower the AML compliance risks in this way.
The US opportunity has certainly not been over-stated, but the landscape comes with a world of pitfalls that operators need to be able to navigate to enjoy the country’s full potential. Those hoping to do so would be well-advised to invest in an intuitive KYC solution.