To comply, an appropriate AML program is essential. Its purpose is to prevent suspicious customers and transactions from entering the financial system. However, criminals constantly invent sophisticated methods of flying under the radar. Therefore, a truly effective AML program must handle new and complex fraud attempts. Otherwise, businesses expose themselves to financial and reputational losses.
1XBET OnlineSuggested read: 6 Key Components of an AML Compliance Program
Although AML laws are the same for online casinos and betting apps , betting still has its own specifics, and the chances of coming across money laundering are high.
Money laundering in betting takes the following forms:
Criminals leverage low-outcome bets to deposit dirty money and withdraw it as “winnings.”
Money obtained from illegal sources is used to sponsor betting as a leisure activity.
Criminals directly invest in/ acquire betting shops. This is what allegedly happened in Bremen, Germany. As a result, the city’s authorities decided to shut down all betting shops.
AML compliance program. To prevent betting businesses from becoming a source of crime and comply with betting regulations, a thorough AML compliance program must be in place. Among other things, it should define how the company detects, assesses, and reports financial crime.
Customer Due Diligence (CDD). Before a customer is allowed to bet, they must go through a Customer Due Diligence check. This involves obtaining the customer’s information to verify their identity and evaluate whether they are involved in any crime.
Enhanced Due Diligence (EDD). In cases of higher money laundering risk, companies apply what is known as Enhanced Due Diligence. One of the most vital components of EDD is checking clients’ source of funds to ensure that they don’t come from illegal activity.
Ongoing customer monitoring. This is an extra layer of risk management that involves ongoing due diligence checks on the customers and scrutiny of their transactions.
Independent AML audits. Such audits allow businesses to detect their deficiencies and failures in their AML strategies, and correct their problems before regulatory inspections. Thus, firms 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 an especially vulnerable industry due to its high-risk nature, and online casinos often commit painful mistakes resulting in huge fines.
Suggested read: Casino Compliance: 6 Common Mistakes and How to Avoid Them
Let’s discuss what casino firms can do to safeguard themselves:
AML compliance program. Online casinos must develop their own compliance programs aimed at fraud prevention. Such programs must define how the company detects, analyzes, and reports criminal incidents such as gambling money laundering and fraud attempts. There is no one-size-fits-all compliance regime, so each online casino must develop one in accordance with the specifics of their business.
Like in betting, a reliable AML compliance program should include:
Customer Due Diligence (CDD) involves gathering basic information about the client (such as their name, address, and date of birth) and verifying it through a reliable source. Online casinos also have to check users (or “gamblers”) against databases containing Politically Exposed Persons (PEPs), sanctioned and blocklisted individuals, as well as adverse media.
Enhanced Due Diligence (EDD) is a more sophisticated check needed in the event that a client poses a high risk of money laundering. Online casinos, however, are almost always required to perform EDD given the high ML risks associated with the sector. EDD includes verification of source of funds (SoF) documents, which include debit/credit cards, bank statements, savings accounts, recent paychecks, etc. The types of accepted SoF documents can vary from casino to casino.
1XBET OnlineEmployee training. If your team is not fully aware of AML-related red flags, even automated prevention tools won’t necessarily keep you safe. Therefore, online casinos must provide necessary training to their compliance officers, including annual refresher courses. Compliance teams must also be aware of the general requirements (such verifying SoF) as well as risk tolerances specific to their casinos.
Reporting. To avoid breaking the law, operators should always report instances of known or suspected money laundering and terrorist financing. Moreover, 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 about the customer, their business, and risk profile, including sources of funds if necessary. It pays to know your customer, as it’s not always at the registration stage when fraudsters or money launderers show their true selves.
Independent AML audits. Independent auditors should audit AML compliance programs to measure their efficiency and avoid possible regulatory fines. Such audits help businesses to detect their AML failures and correct them before regulatory inspections. Thus, companies can be protected from high regulatory fines.
Money lending prevention measures. In the UK, licensed casinos take appropriate measures to prevent organized money lending between customers on their premises. Similarly, if money lending appears to be commercial and/or connected to ML activity, online casinos must be prepared to report such cases to the Gambling Commission.
The UK Gambling Commission has recently made onboarding and verification of clients even stricter. Without successful verification, casinos can neither allow users to deposit money, nor grant them access to free-to-play games, free bets, or bonuses.
5. Fundamental gambling/casino KYC requirements
5. Fundamental gambling/casino KYC requirements
In most jurisdictions online casinos are obliged to conduct a Know Your Customer (KYC) procedure as part of the local AML regulations. KYC requirements for casinos differ from one jurisdiction to another, but usually they include the following:
6. Responsible gambling guidelines—from underage gambling to marketing ethics
Gambling is only fun when done sensibly; otherwise, it becomes dangerous. To make sure gamblers and gamers are not at risk, regulators demand that online casinos and betting shops keep up with responsible gambling requirements.
This also concerns video games. In 2019 video game firms faced the risk of prosecution in the UK over gambling by children, with such products as skins and loot boxes in Counter-Strike and Call of Duty. Skins are in-game items that can be won in the game, while loot boxes invite players to pay a certain amount for a mystery reward. Such items aren’t defined as gambling under English law, due to the fact that the in-game items cannot be exchanged for cash within the game. However, they can still be bought and traded with real money on other sites, and acquiring them may involve an element of chance, similar to placing a bet. The UK’s Gambling Commission said it is prepared to regulate this when the proper legislation is introduced.
According to the UK’s Gambling Act 2005, it is illegal to permit any person under the age of 18 to enter a licensed gambling premises. Yet, a 2019 study conducted by GambleAware and the University of Bristol shows that 50% of 17-year-olds living in the UK are gambling on a regular basis. To protect themselves from underage gamblers and related regulatory fines, online casinos must ensure that new players submit their official IDs for verification to comply with casino KYC requirements.
The legal age for gambling varies across countries; most set it at 18, while in Greece and in most US states it’s 21. In Malta, the age is much higher, at 25 for locals. While Portugal has complicated laws, with different age requirements depending on the institution.
Controls for detecting problematic gambling behavior
An important aspect of responsible gambling is being able to stop damaging behavior before it seriously affects a player. Therefore, online casinos have to be on the lookout for warning signs. This means implementing three specific measures for detecting gambling addiction.
When onboarding players, online casinos must check if their names appear on self-excluded lists. If so, the casino must bar them from entry. Self-excluded lists may belong to a specific casino or be part of broader, national self-restriction schemes, such as GAMSTOP in the UK.