(Casinos have always attracted thieves and fraudsters. AML and KYC prevent their crimes. Let's see what these practices are and why they’re essential.)

Necessity of AML and KYC in Gambling Industry

Why do casinos always request your passport? Will they abuse it? In 99% of the cases, it’s harmless. If the casino has a license, it’s legally obligated to AML and KYC practices to prevent crime. Let’s see how it works!

What Are KYC and AML?

KYC stands for Know Your Customer. It’s a common practice in any structure connected with money transactions. Casinos need it to stay compliant with their regulations and to prevent violations and crimes we’re about to expose.

AML is Anti-Money Laundering. It’s also common but prevalent amid structures with major transactions (at least $1,000+). Casinos are among them.

Importance of KYC and AML

Long before going online, brick-and-mortar casinos were popular among money launderers. However, the crime was difficult to perform. A fraudster had to visit a casino and expose his identity, making him an easy investigation target.

Online casinos simplify criminals’ jobs. Not only can they act from any place, but they also can change IP to become elusive. This has boosted crime rates.

(Source - Unsplash)

In November 2022, the Australian Transaction Reports and Analysis Centre (AUSTRAC) fined the Crown Resorts operator $100,000,000 as money launderers moved money through their non-transperant channels. How can this happen? Casino misled a commission about their AML, which was weaker than it should have been.

Another case was in Canada. According to the Cullen Commission report, a province of British Columbia was brimming with money laundering schemes in 2022. The province had to implement an AML commissioner to prevent crimes. Such examples remind casinos how important AML and KYC are if they don’t want to lose millions or a reputation.

But money laundering isn’t the only issue. According to The Guardian, about 25,000 children aged between 11 and 16 were problem gamblers in 2017. YouTube and Twitch caused it.

Kids watch content creators who promote gambling as a fun and profitable leisure. They get into it. A proper KYC won’t let youth join gambling.

The final threat is fraud. Hackers and identity thieves can access your account and withdraw cash in their wallets. KYC can prevent that. If the casino sees a player’s big sum heading to the suspicious wallet, they ensure it isn’t a steal.

What’s the KYC Process

KYC might differ based on a casino’s license. But here are several common pieces of information casinos request:

• Full name.
• Place of residence, including city, street, building number, and ZIP code.
• Phone number. After indicating it, you must prove that it’s yours. Check these casino sites without verification if you can’t or don’t want to do it.
• Identity-proving documents, like a passport, driver’s license, ID card, or any analog.

Often, the first three elements are requested during or after registration. Meanwhile, the document is required before a withdrawal.

Interestingly, KYC evolves according to the criminals’ tricks. They’ve learned to get fake documents and indicate them to casinos. To counter that, casinos may ask players to take selfies of themselves holding a document’s specific page.

How AML Works

Anti-Money Laundering is complex. First, it utilizes the data from KYC for an initial analysis. If the casino managers see something wrong, they’ll contact a player.

Next, there’s machine learning. If algorithms spot a suspicious activity like:

• Collusion play – a money launderer makes a huge deposit and intentionally loses it entirely to a single poker player;
• Big play – a money launderer deposits a lot of cash and wagers its small percentage.

These make a player a suspect. But it’s only a concern if the player isn’t trying to withdraw the cash. But when he does, CTR and SAR come into play.

CTR stands for Currency Transaction Report, meaning the casino must document and file the transaction. SAR is a Suspicious Activity Report. It’s also a document, but this one discusses the player’s suspicious actions. Both reports are initiated only for $10,000+ transactions and can serve as evidence during a money laundering investigation.

Difficulties KYC and AML

As we pointed out, criminals evolve. Each day, they improve their KYC/AML-avoiding techniques. Security measures are outdated pretty fast. That’s why cybersecurity is on a challenging mission to make casino crimes impossible.

(Source - Unsplash)

Interestingly, casinos rarely participate in the process. It’s primarily iGaming authorities like MGA (Malta Gaming Authority) and Curaçao (Curaçao Gaming License Company). And then, their licenses obligate casinos to follow new KYC and AML practices.

Fun fact: if a casino doesn’t have a license, KYC and AML are unnecessary. But unlicensed casinos aren’t trusted, making their revenue small and uninteresting for money launderers.

Final Thoughts

Money laundering and crime walk along casinos. Their increasing revenues lure criminals, which requires a response: KYC and AML.

Indeed, these practices aren’t always convenient. They extend your withdrawal processing time and make you expose your data. However, the law obligates casinos to implement them. After all, KYC and AML aren’t just to keep casinos away from fines but also to protect players from fraud.