AML compliance program. To prevent betting businesses from becoming a source of crime and to comply with betting regulations, a comprehensive AML compliance program must be implemented. This must, among other things, explain how the company detects, assesses and reports financial crime.
.jpg)
Customer Due Diligence (CDD). Before customers are allowed to gamble, they must go through a Customer Due Diligence check. This involves obtaining customer information to verify their identity and evaluate whether they are involved in any crime.
Enhanced Due Diligence (EDD). In cases where the risk of money laundering is higher, companies implement what is known as Enhanced Due Diligence. One of the most vital components of EDD is checking the source of the client’s funds to ensure that they are not derived from illegal activities.
Ongoing customer monitoring. This is an additional layer of risk management that involves ongoing due diligence checks on customers and monitoring of their transactions.
Independent AML audits. Such audits allow companies to detect deficiencies and failures in their AML strategies, and fix them before regulatory inspections. This way, companies can be protected from high regulatory fines.
Gambling operators must comply with laws and regulations aimed at preventing casino money laundering and terrorist financing (ML/FT). This is a highly vulnerable industry due to its high-risk nature, and online casinos often make painful mistakes that result in large fines.
AML compliance program. Online casinos must develop their own compliance program dedicated to fraud prevention. The program must explain how the company detects, analyzes, and reports criminal incidents such as gambling money laundering and fraud attempts. There is no universal compliance system, so each online casino must develop a compliance system according to the specifics of its business.
Customer Due Diligence (CDD) involves collecting basic information about the client (such as name, address, and date of birth) and verifying it through a trusted source. Online casinos must also check users (or “gamblers”) against databases containing Politically Affected Persons (PEPs), sanctioned and blacklisted individuals, and adverse media.
Enhanced Due Diligence (EDD) is a more sophisticated check that is required if the client poses a high risk of money laundering. Online casinos, however, are almost always required to perform EDD due to the high ML risks associated with this sector. EDD involves verifying source of funds (SoF) documents, which include debit/credit cards, bank statements, savings accounts, recent paychecks, etc. The types of SoF documents accepted may vary from casino to casino.
Employee training. If your team isn’t fully aware of the red flags associated with AML, even automated prevention tools won’t keep you safe. That’s why online casinos should provide their compliance officers with the necessary training, including annual refresher courses. Compliance teams should also be aware of general requirements (such as SoF verification) as well as the specific risk tolerances for their casino.
Reporting. To avoid breaking the law, operators must always report known or suspected money laundering and terrorist financing incidents. In addition, operators should be aware that there is no minimum financial threshold for reporting these activities.
Ongoing customer monitoring. Monitoring helps gambling operators see the big picture of their customers, their business and risk profile, including where funds are needed. Knowing your customers is helpful, as it is not always at the registration stage when fraudsters or money launderers reveal themselves.
Independent AML audits. Independent auditors should audit AML compliance programs to measure their efficiency and avoid potential regulatory fines. Such audits help businesses detect their AML failures and correct them before regulatory inspections. This way, companies can be protected from high regulatory fines.
Money lending prevention measures. In the UK, licensed casinos take appropriate measures to prevent organised money lending between customers on their premises. Similarly, if the money lending appears to be commercial in nature and/or related to ML activity, online casinos must be prepared to report the case to the Gambling Commission.
The UK Gambling Commission has recently made client onboarding and verification stricter. Without successful verification, casinos cannot allow users to deposit money, or give them access to free play, free bets or bonuses.
In most jurisdictions, online casinos are required to carry out Know Your Customer (KYC) procedures as part of local AML regulations. KYC requirements for casinos vary from jurisdiction to jurisdiction, but typically include the following:
Gambling is only fun if it is done wisely; otherwise, it becomes dangerous. To ensure that gamblers and gamers are not at risk, regulators require that online casinos and betting shops meet responsible gambling requirements.
This also applies to video games. In 2019, video game companies faced prosecution in the UK for child gambling, with products such as skins and loot boxes in Counter-Strike and Call of Duty. Skins are in-game items that can be won in-game, while loot boxes invite players to pay a certain amount to win a mystery prize. These items are not defined as gambling under UK law, due to the fact that in-game items cannot be exchanged for cash in-game. However, they can still be bought and traded for real money on other sites, and acquiring them may involve an element of chance, similar to placing a bet. The UK Gambling Commission has said it is prepared to regulate this when appropriate legislation is introduced.
Under the UK Gambling Act 2005, it is illegal to allow anyone under the age of 18 to enter a licensed gambling establishment. However, a 2019 study by GambleAware and the University of Bristol found that 50% of 17-year-olds living in the UK regularly gamble. To protect themselves from underage gambling and the associated regulatory fines, online casinos must ensure that new players submit their official ID for verification in order to comply with the casino’s KYC requirements.
Crypto CasinoThe legal age for gambling varies from country to country; most set it at 18, while in Greece and most American states, it is 21. In Malta, the age is much higher, at 25 for locals. Portugal, meanwhile, has complicated laws, with age requirements varying by institution.
An important aspect of responsible gambling is the ability to stop destructive behavior before it has a serious impact on the player. Therefore, online casinos must be aware of the warning signs. This means implementing three specific steps to detect gambling addiction.
When admitting a player, an online casino must check whether their name appears on a self-exclusion list. If so, the casino must ban them from entering. Self-exclusion lists may belong to a specific casino or be part of a wider national self-exclusion scheme, such as GAMSTOP in the UK.
Detecting signs of gambling addiction is an ongoing process that occurs throughout the customer lifecycle. Addictive behavior can manifest itself in a variety of ways, such as when a player chases losses, plays high stakes, or exhibits erratic gambling patterns. Once problematic behavior is detected, online casinos should restrict affected players from their services and, ideally, direct them to help.
When checking the source of funds/wealth for AML compliance of a casino, the casino should analyze whether a player exhibits a pattern of behavior related to problem gambling. For example, a warning sign could be when someone spends €3k ($3.1k) per month, while earning only €2k ($2.1k).
Activity warnings. Notify users if they have been playing for too long. What constitutes ‘too long’ is also determined by the player. Some countries, such as Sweden, require these warnings for all players.
Deposit limits. Players set certain limits on their deposit amounts to stick to their budget and avoid overspending.
Time limit. Users have the option to pause their accounts for a period of time that best suits them.
National self-exclusion. Users enter their name on a national self-exclusion register to block themselves from accessing any gambling websites in their country. In the UK, for example, all online casinos are required to have a GAMSTOP membership.
Permanent self-exclusion. Players can block themselves from online casinos permanently and irreversibly, requesting to stop any contact and no longer receive marketing promotions.
There are many more initiatives that a country can take to protect its citizens. Denmark, for example, requires all online gamblers to take an online test that reveals whether they are addicted to gambling.
During the COVID-19 pandemic, regulatory measures have been tightened around the world in an effort to better protect problem gamblers. For example, Sweden introduced a weekly deposit limit of SEK 5k ($493) and the UK issued toughened guidelines in response to data showing players were spending more time and money on gambling.
Online casinos should avoid targeting vulnerable groups, such as children, teenagers or selfless players. Similarly, gambling should not be normalized through sports sponsorships or any other media that can be associated with youth culture.
These marketing restrictions could also affect the timing of casino ads. For example, new regulations for online gambling platforms in Germany prohibit ads between 6am and 9pm. The UK is also set to introduce advertising restrictions, given the finding that 96% of 11-24 year olds in the UK were exposed to gambling ads in February 2020, prompting them to place a bet immediately.
In September 2020, the UK made it mandatory for students to be taught about the risks of online gambling in schools. The same is expected of online casinos, which must educate users about the dangers of gambling through videos, blog posts, webinars and other initiatives aimed at raising awareness of gambling addiction.
Fraud has become a real threat to the gambling industry, with schemes such as bonus hunting, multi-accounting, account takeovers and illegal chargebacks on the rise.
.jpg)