The 2021 Guide - Identity Verification for Online Casinos
Introduction
In 2017, the global online gambling market was valued at over $45 billion. It is projected to reach $94.4 billion by 2024. Due to the rapid rise in online gambling, and the large amounts of money that are being transferred through these entities, they are now under the same scrutiny as other banks and financial institutions. The online gambling and gaming institutions are prime targets of identity fraud, money laundering and international financial crime. To prevent this, regulatory compliance has intensified.
The 'Know Your Customers' process is one of the major mandatory onboarding procedures in anti-money launder legislation. Online gambling sites must identify and verify their customers as a means of verifying identity. This is done to flag potentially dangerous users and keep an eye out for suspicious activity.
As online gambling services increase in popularity, so does the need for regulatory compliance. This not only means hiring a large team of compliance professionals to manage the backlog but also that online casinos have higher wait times and costs for identity verification. Manual KYC processing for casino is somewhat outdated. It's a slow and inefficient solution that can waste time, cost you more money, and is full of errors.
Today's technology era calls for an easier way to verify identity or play online casino. GetID's state-of-the art technology allows for accurate identification verification. It offers a multi-tiered architecture that ensures accuracy and minimizes wait times. Our omnichannel platform allows online casinos and gambling websites to verify customers quickly. This next-generation platform eliminates the need of large compliance teams, multiple verifiers, unnecessary delays, and costly costs. Online casino players and online gambling providers can now get almost instantaneous identity verification with no additional costs and keep up to date on regulatory compliance.
Are you interested in learning more? This guide to ID verification in casinos provides a detailed breakdown of the information casinos need to be compliant and how GetID can help facilitate smoother onboarding.
What is KYC and ID verification?
KYC stands for Know Your Customer. KYC processes are used to verify users' identities and are an integral part Anti-Money Laundering Compliance (AML). KYC, sometimes referred to in online gambling establishments as "Enhanced Due Diligence", is a mandatory account verification process. It helps to prevent financial crimes from the beginning.
KYC is shorthand for verifying that a customer really is who they claim. This is important for banks and financial institutions as it helps prevent fraud, financial crimes, money laundering, and other criminal activities. KYC is used to verify the identities of customers for online gambling companies. It goes beyond financial crimes.
KYC helps to stop the illegal funds flowing through online gambling sites by identifying customers with Personal Identifiable Information, (PII), and official identification documents. KYC procedures are also used to identify gambling addicts, underage gamblers, players who attempt to use multiple accounts and users who want to avoid being caught. This protects casinos from being used to commit crimes, and it ensures that online gambling establishments do not lose money due to fraudulent users.
KYC procedures are particularly important for online gambling businesses because money laundering or terrorist funding often take place on an international level. Because online casinos can be used by gamblers from many international jurisdictions, there are strict controls to ensure that illicit activity is not allowed to leak across borders.
What Does the Law Say?
Customers who sign up from other countries are often a problem for online casinos. Although an online casino can be registered in the US, its users could come from the EU or UK, where regulations are stricter than those in the US.
Most online casino owners do not realize that even if a platform is registered to a less restrictive jurisdiction, it is still subject to the rules imposed by each nation. Costa Rica, for example, is a country that has very relaxed gambling regulations. Online casinos that are based in Costa Rica serve UK clients, but it must follow the strict AML/KYC procedures.
In this regard, online gambling establishments must adhere to the AML/KYC regulations enforced by stricter jurisdictions such as the USA, UK, or the EU.
USA
Non-bank financial institutions (NBFI) are online gambling establishments in the USA that generate more than $1 million in gross revenue. To prevent fraud, financial crimes and money laundering, they must comply with the same regulations as banks.
Financial Crimes Enforcement Network, or FinCEN, is responsible to monitor compliance with AML regulations as set forth in the Bank SecrecyAct (BSA). Financial institutions are required by the BSE to assist the government in identifying and reporting suspicious activity and transactions. FinCEN has delegated this responsibility to Internal Revenue Service (IRS), to ensure that compliance measures are met.
AML measures that are applicable to online casinos include reporting suspicious activity (SARs), for unusual transactions exceeding $5000, and currency transactions exceeding $10,000. Recordkeeping and receipt storage requirements are extremely stringent, as well credit extensions of more than $10,000.
These AML measures are essential, but US online casino operators must first verify and identify customers using KYC processes. You could face severe penalties if you fail to comply. American Gaming Association (AMA), in fact, recently updated their policies. The new regulations state that US users are not allowed to open accounts without basic PII information. These details include full legal names, addresses, and social insurance numbers. Importantly, real-money transactions cannot be initiated without providing official government ID and proof that you have a permanent address.
It is important to note that AMA's rules are applicable only to the patron and not to the casino itself. The rules apply to US citizens who use an online casino located in another jurisdiction. This is because online gambling platforms are likely to not have the necessary measures in place.
United Kingdom
UK AML regulations are very strict and rely on the Proceeds of Crime Act. However, the UK insists on KYC procedures online gambling entities. This is not just about anti-money laundering. Three main reasons have led the UK to adopt strict KYC regulations. KYC procedures are used to verify a user's identity and help prevent underage gaming.
To combat gambling addiction, KYC processes should be used to determine if the user has self-excluded from gambling. Voluntary Self Exclusion allows gambling addicts to be added to watchlists in order to stop casinos from allowing them gamble. To identify and stop gambling addicts opening accounts, KYC should check users against these lists.
Identity verification can also be used to identify candidates at high risk who might hold power positions or are subject to financial sanctions. This helps protect against money laundering and terrorist funding as well as other financial crimes.
It is important to note that the UK has very strict verification procedures. These are known as 'Threshold verification'. This means that all users must complete KYC before opening an account. The UK insists on completing KYC immediately upon signing up, unlike other jurisdictions which may require KYC checks only for withdrawals or deposits.
European Union
The EU 4th Money Laundering Directive, and the Prevention of Money Laundering Act are two of the key pieces of legislation to ensure AML compliance for EU online casinos users.
These directives have a lot in common with the UK and USA, but are slightly more flexible on KYC. EU law says that KYC is not activated unless players deposit more than 2000 EUR into an account at an online casino. tips on how to play in online casinos
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