Every sector uses KYC compliance to confirm consumers’ identities. KYC compliance stops fraud, money laundering, and other financial crimes in the gambling sector. In the gaming sector, more players mean more chances of illicit activities and crimes. As the gaming sector rises, these white-collar crimes are also increasing. Researchers said this market will grow by more than 11% annually. Know Your Customer (KYC) and anti-money laundering (AML) regulations aren’t just optional but mandatory to apply in the fight against fraud, account takeovers, and money-laundering attempts.
Under the Bank Secretary Act (BSA), online casinos were designated “financial sectors” in 1985 after noticing the hype of online gambling. So, the same rule applies to them: they have to file currency transaction reports for amounts greater than $10,000 and comply with the same KYC/AML guidelines used in banks and other financial sectors. Federal agencies may file lawsuits against gambling casinos if they violate or fail to fulfil AML/KYC compliance.
The gaming companies must verify the player’s age, address, and source of funds as part of the KYC onboarding process. KYC compliance is crucial to the fight against money laundering, identity theft, and other financial crimes. These checks are necessary for businesses and beneficial for users to ensure their data is secured and monitored. KYC authentication assures users that their accounts are safe from unauthorized access. KYC due diligence strengthens the bond and boosts the user’s confidence in the business, leading to the best and most comfortable gaming experience.
KYC compliance provides many benefits in the casino industry, such as preventing costly blunders and money laundering. Several advantages are listed below:
The main advantage of KYC compliance in the gaming industry is that it helps prevent fraud and identity theft. By verifying customers’ identities, businesses can ensure that they are not facilitating any illicit activity or bad actors.
KYC compliance requires knowing the person’s age before allowing them to play. It’s mandatory in jurisdictions where there are strict rules of age for gaming and gambling. By doing so, companies can save themselves from heavy fines and legal penalties.
By applying KYC compliance, companies can protect the name of their sites from negative publicity and a bad reputation. By using AML/KYC compliance, businesses can build trust between customers and regulators.
In the gaming industry, KYC compliance has many benefits, but there are also many drawbacks if a corporation doesn’t follow the rules.
If a company doesn’t follow KYC compliance, its standards may fall, leading to a bad reputation for the business. And the businesses aren’t considered trustworthy and reliable by customers and partners. Customers might leave the gaming platform for a more secure one.
Government officials can impose penalties on businesses that do not follow KYC compliance. In some circumstances, the fines can be significant, amounting to millions or even billions of dollars. These penalties can ruin a business’s reputation and cause considerable financial losses.
Legal authorities can impose penalties and sanctions on businesses that are non-compliant with KYC regulations. The legal charges depend on the severity of the crime. It can be costly and time-consuming and can result in reputational damage and financial losses. So, businesses must follow KYC compliance to avoid these potential failures and reputational damage.
When applying for KYC checks on a business, it’s crucial to verify the individuals involved and the risk factors associated with each individual. By implementing KYC compliance, the online gaming industry can reduce the possibility of serving as a channel for money laundering. KYC verification reduces the risk of data breaches leading to identity theft and account takeovers. Flagged people don’t have access to services or accounts. When an individual tries to create an account, the system asks them to enter personal details and submit official documents. If the individual enters the wrong credentials, the system will automatically reject the application. Or if disparities are found between the data entered and the referenced database, the system indicates a scam.
Robust KYC software helps businesses in the financial industry safeguard themselves from hefty fines and reputational damage. If it’s found that the company is supporting illicit activities and not following KYC compliance, legal authorities can impose penalties and severe charges on the business, depending on the nature of the violation.