KYC Verification in Online Casinos

KYC is a standard in the online gambling industry to identify players accessing casinos’ services. KYC stands for ‘Know Your Customer/Client’ and describes the process performed to prevent illegal activities like fraud and money laundering by tracking who is playing. In return, both casinos and clients stay protected. The process is relevant to any institution that deals with money and casinos qualify by light years.

Why KYC Matters

The current age is witnessing an extensive use of the internet and new technologies to explore financial and gambling services. Therefore, it’s more necessary than ever to define standards that help fight fraud and financial crimes like corruption, money laundering, and terrorist funding. Such criminal activity affects not only financial institutions like banks and e-wallets but also clients, broader markets, and global economies. The Know Your Customer procedure allows companies to verify a player’s identity to ensure they are who they say they are. As part of due diligence, the process prevents casinos and money transfer platforms from conducting business with individuals associated with criminal activity.

How It Works

The basic requirements for the Know Your Customer procedure are specified by laws set by jurisdictions or regulatory bodies. The legal basis of these Know Your Customer principles is provided by the Financial Action Task Force (FATF). Over 190 countries follow the provided guidelines and complement them with laws and regulatory bodies to implement them. For instance, in the European Union, Know Your Customer and Anti-Money Laundering are governed by AMLD and eIDAD Regulations. The United Kingdom has similar laws enacted by the Electronic Identification and Trust Services for Electronic Transactions and Proceeds of Crime Act 2002 Regulations.

The exact demands to complete the KYC process vary depending on the industry. Since casinos are financial service providers, they usually have strict requirements similar to those of banks and financial service providers. Usually, there are four components of KYC:

Customer Identification Program

CIP is the basic KYC form that requires the gambling den to obtain identifying information like full name, birth date, phone number, email, and country of residence. This step is usually completed during casino account registration, and players can manually key in the requested information without providing any documents. However, most casinos send unique codes to verify the phone number or email provided.

Customer Due Diligence

CDD is the stage in which punters’ credentials are collected to verify their identity. Casinos typically require a government-issued ID, passport, or driver’s license. Gaming sites may also ask for proof of address, especially if they are strict about the regions where they offer services. The documents are verified for forgery and other issues to evaluate one’s risk profile for suspicious activity.

Enhanced Due Diligence

EDD is usually reserved for clients with higher-risk tendencies, like massive money transfers. In such cases, casinos can run face verification or liveness checks to ensure the customer’s presence and identify spoof attacks on time.

Continuous Monitoring

Know Your Customer is more than just a one-off check on players. Casinos must keep tabs on gamblers’ activities for as long as they have a real money relationship. The extent and frequency of scrutiny vary depending on the gaming site.

KYC in Cryptocurrency Casinos

The blockchain and cryptocurrency markets are praised for offering a decentralised medium of exchange that prioritises confidentiality. On the downside, this advantage presents new challenges that promote money laundering. Since crypto accounts and exchanges are not pegged to a person or organisation’s identity and aren’t tracked by financial institutions, criminals see them as the perfect vehicle to launder money. Sometimes, crypto casinos are made a part of the scheme. As a result, governing bodies globally are looking into new ways to impose Know Your Customer protocols on digital currency markets.

While cryptocurrency casinos are not legally required to verify their clients in many countries, many align with KYC practices. Some of these gaming sites also serve as fiat-to-crypto exchanges. Since fiat currencies are tied to a country, they can employ KYC measures that vet players according to stipulated requirements.

Advantages of a Robust KYC System

With the global economy ballooning by the day, casinos and financial institutions are more vulnerable to illicit activities than ever. KYC standards protect these platforms from such criminal activities and boost service provision in more ways than one:

  • Rapid availability – KYC checks are often instant and provide players with gambling and money transfer services almost immediately. While there are chances of delays or challenges when completing transfers, digital KYC onboarding procedures improve the client experience by reducing how fast they are resolved.
  • Affordability – casinos benefit from higher conversion rates and client acquisition by adopting automated and AI-driven KYC solutions. It also saves gambling dens from paying heavy fines for failing to adhere to Know Your Customer regulations.
  • Reputability – KYC regulations mainly reduce the chances of doing business with criminals, but it also goes a long way in avoiding reputational damage. Trust goes a long way in online casinos, and taking KYC seriously helps establish their credibility.
  • Omnipresence – Players can go through KYC verification anywhere and anytime as long as they meet the stipulated requirements.
  • Prevents underage gambling – ID verification is necessary during the KYC procedures, making it impossible for individuals below the legal gambling age to access real money casino services.
  • Prevents problem gambling – KYC-complying casinos have a social responsibility to prevent self-excluded gamblers from accessing their platforms. This feat is accomplished by running their IDs and verifying whether they are flagged problem gamblers.

Picking a Safe Casino for KYC

While KYC compliance is a standard in the gambling industry, not every casino has players’ best interests at heart. Accordingly, it is critical to research the best KYC casino before committing real money. Here are traits to look out for in the process:

Operating Licenses

The best online casinos implement strict KYC processes specified by licensing institutions. These bodies only grant permits to casinos that abide by regulatory compliance, among other fairness and security features. Bodies with the most reliable Know Your Customer regulations include:

  • The UK Gambling Commission
  • Malta Gaming Authority
  • HM Government of Gibraltar
  • Alderney Gambling Control Commission
  • Curacao eGaming
  • Isle of Man Gambling Supervision Commission

Privacy Policy

The Know Your Customer processes require players to provide sensitive information like a copy of a verified ID, passport, driver’s license, and credit/debit card details. The Privacy Policy in casinos is meant to help players understand the information collected, why it is collected, and how it can be updated, managed, exported, and deleted. It also stipulates how the gaming site intends to use the data, often specifying that it won’t be shared with third parties or unauthorised parties.

Security Measures

While the Privacy Policy reassures players about internal threats, security measures are necessary to protect them from external factors like hackers and fraudsters. Gamblers’ sensitive data and account activity are usually protected with SSL (Secure Socket Layer) encryption, which seals information transmitted between two points on the internet. Another popular security measure is the use of password/PIN-protected accounts.

Reviews

Online casinos can sing a good game about how robust their KYC protocols are, but confirmation about their quality from the masses goes a long way. Check for reviews from professional websites and other players on how easy and effective a site’s Know Your Customer procedures are before committing real money.

Usability

Casinos with well-executed KYC identification systems are impressive thanks to high user-friendliness. Know Your Customer processes require players to enter personal information and upload documents. The easier it is to accomplish these protocols, the better.

Frequently asked Questions

What activates KYC in casinos?

Different things can trigger KYC, such as a new player registering an account, a change in the payment method used, unusual transaction activity, or withdrawal of a large amount of money.

What do I require for KYC?

The basic mandatory KYC document is proof of identity, which can be a copy of a government-issued ID, passport, or driver’s license. You may also have to provide a copy of the credit/debit card used to make payments to and from the casino. In some cases, a photograph and proof of address may be requested.

How much does KYC cost?

KYC does not cost a dime for players. All that is required is an upload of the requested documents without paying a fee. On the other hand, the procedure costs financial institutions up to $500 million annually.

Why is KYC important?

In jurisdictions with regulated gambling, online casinos and financial institutions are required by law to run KYC before conducting business with new clients. The procedure helps to verify a player’s legitimacy and weed out potential risks like money launderers, fraudsters, identity thieves, and financial criminals.

Who regulates KYC?

FATF (Financial Action Task Force) is the most popular KYC regulatory body. The institution provides a legal framework for Know Your Customers procedures for EU and UK markets. However, it is up to individual jurisdictions to implement them into law for financial institutions and casinos to comply. Over 190 countries follow the provided FATF guidelines and have regulators to enforce them.

Author

🤓Frank

A seasoned veteran with years of igaming experience. A local to New Zealand land based casinos, Frank will teach you the ins and outs of all things online casino, diving deep into the subjects of casino bonus, freepins, online pokies and $1 NZ deposit bonus.