Finding the Right Level of KYC for Online Gaming & Gambling

Finding the Right Level of KYC for Online Gaming & Gambling

Knowing your ideal customer is one of the most fundamental aspects of any business, but for those in the gaming and gambling sectors, it’s a regulatory requirement. The global regulatory landscape is diverse, and businesses must keep up with developing rules. Utilizing a risk-based approach with different levels of KYC will be critical for ensuring regulatory and jurisdictional compliance.

What are KYC checks?

Know Your Customer (KYC) is part of the process of verifying a customer’s identity and is a crucial component of Anti-Money Laundering (AML). Most regulated financial markets require organizations to perform KYC checks to authenticate an individual. Qualifying organizations need to verify who their customers are before they engage in a business relationship. Typically, customers are required to provide credentials such as PII (personally identifiable information) and some form of identity document in order to use a company’s service.

These checks help companies meet KYC and AML requirements and reduce fraud. Here are some of the regulated markets where KYC checks are required:

    • Gambling & Social Gaming
    • Finance & Banking
    • Payments & Digital Money
    • Cryptocurrency
    • Retail Finance

Regulated companies undertaking financial activities are required to apply risk-based customer due diligence (CDD) measures to prevent their businesses from being successfully targeted by money launderers or terrorist financiers. By conducting thorough KYC and AML checks, businesses can dramatically reduce the financial, reputational, regulatory and strategic risks from other entities. These checks enable businesses to gain a true understanding of their customers, whilst also searching and monitoring other datasets such as PEPs (politically exposed persons) and sanctions databases to help provide confidence in the risk protection processes.

KYC policies have been expanding for some time and have become very important globally. More so, not carrying out required KYC checks can result in penalties by regulatory bodies such as the US’s Financial Crimes Enforcement Network (FinCEN) or the UK’s Financial Conduct Authority (FCA). As part of efforts to ensure customers are not only who they are claiming to be but that companies can and should transact with them, it’s smart for businesses to perform KYC and customer diligence, regardless of whether AML regulations are required.

The Different Levels of KYC

To verify their identity when opening an online gaming or gambling account, customers are typically required to provide credentials such as identity documents, personal information or biometric data to be approved to use a company’s service. The provided identifying information is matched against numerous legitimate, high-quality data sources to determine the identity’s validity.

KYC benefits both companies and customers: it allows companies to protect themselves by ensuring that they are doing business legally and with legitimate entities rather than fraudsters, and protects customers who may otherwise be harmed by financial crime.

A risk-based approach and the jurisdiction in which a business is operating will determine the level of KYC required by regulators to remain compliant, as different jurisdictions may require differing levels of customer due diligence. There are three levels of KYC that should be utilized for effective identity proofing across the board:

1. Light Touch: Light touch KYC involves verifying a customer’s identity where the customer doesn’t have to supply a form of identity document but can be verified via their digital footprint or credit bureau data. This would be an adequate check to verify customer identities at the onboarding stage for most operators.

2. Stringent Check: A stringent KYC check typically involves identity verification through a government-issued identity document and biometric liveness matching, as well as a proof of address. Anything where the customer is required to provide government-issued documents would be considered a stringent check.

3. Extensive Check: Extensive KYC checks would involve the same as a stringent check, in addition to enhanced due diligence (EDD) checks such as making sure the customer is not on any PEPs and sanctions lists, has no previous convictions and is eligible to legitimately use the company’s service.

Streamlining Onboarding with KYC

When performing online KYC checks, cross-referencing data from multiple sources in seconds is key for streamlined customer onboarding. With a comprehensive identity proofing and compliance platform, online gaming and gambling companies can instantly verify customer identities through various digital identity verification methods depending on the level of risk posed.

Utilizing an automated KYC solution will enable companies in all industries and jurisdictions to implement a risk-based strategy that allows for an efficient customer onboarding experience without compromising regulatory compliance. A risk-based KYC approach helps global organizations perform enhanced due diligence as needed, increase customer acquisition, increase revenue, comply with regulations and mitigate the risk of fraud—without compromising the customer experience.

Learn how a risk-based KYC approach can improve customer onboarding in our eBook: Build Trust & Improve Customer Onboarding with Automated KYC.


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