Gambling Regulations: Frequent Errors and Strategies for Prevention
In the rapidly growing online gambling industry, adhering to anti-money laundering (AML) regulations and customer verification (KYC) procedures is crucial for casinos to avoid hefty fines, license issues, and reputational damage.
All clients must be thoroughly checked for self-exclusion, especially problem gamblers who have registered themselves to avoid relapsing in moments of weakness. Proper AML policies and automated checks are necessary for identity verification, helping casinos steer clear of fines and reputational damage.
Unfortunately, common mistakes in casino compliance often lead to such predicaments. Insufficient customer due diligence (CDD) and KYC verification are a significant issue. Casinos must verify customer identities to assess money laundering risks. Failing to properly collect and verify official ID documents can lead to AML violations, resulting in substantial monetary fines.
Overlooking compliance obligations is another pitfall. Casinos sometimes underestimate the complexity of regulatory demands, including periodic audits and documentation requirements. One example involves a sportsbook operator whose Panama gambling license application was delayed six months due to missing financial statements from board members.
Failure to implement or update internal controls is another common error. Not conducting proper risk assessments or ignoring regional differences in policies (e.g., payment methods) can expose casinos to fraud or regulatory breaches.
Lack of robust controls in sensitive areas can also pose a threat. Casinos must tightly control access to sensitive areas like cash cages, vaults, and gaming equipment to prevent internal theft and fraud.
Poor transparency and communication with customers can cause customer frustration and regulatory complaints, indirectly harming compliance reputation and standing with regulators.
Lessons learned emphasize the need for robust and continuously updated AML programs, ongoing staff training, comprehensive documentation, strong identity verification processes, and clear communication with customers.
Examples of fines and consequences due to non-compliance include significant monetary penalties and damage to the casino’s reputation and credit rating, which can threaten business viability and license renewals. Maintaining strict adherence to AML regulations and rigorous KYC procedures is essential for avoiding such consequences.
To help casinos build a proper KYC process, Sumsub offers a guide to screen customers for money laundering and enforce age verification requirements in the EU and UK. Casinos must also verify the source of funds of the customer upon onboarding.
Operators should use open source data to assess affordability for their customer base and improve risk assessment. Ongoing monitoring and compliance reports are crucial for casinos to avoid AML violations and potential fines.
As the global online gambling and betting industry is projected to surpass $172.23 billion by 2030, it's more important than ever for casinos to ensure they are compliant with AML regulations. Casinos should adjust their marketing campaigns to ensure they don't promote to those on self-excluded lists and properly carry out financial checks to prevent gambling-related harm and potential fines.
Recent cases highlight the importance of these measures. For instance, online betting firm Betway was fined £11.6m ($14m) in 2020 for failing to prevent money laundering and problem gambling. Similarly, 888, an online casino company, failed to carry out proper financial checks, leading to a vulnerable client losing £37k ($44.9k) in six weeks during 2020 and a £9.4m ($11.4m) fine.
The UK Gambling Commission will enforce provision 3.4.3 on September 12, 2022, requiring operators to assess affordability as part of customer interaction. Casinos must also be vigilant for fraud schemes like bonus hunting, multi-accounting, account takeovers, and illicit chargebacks, which have become a significant issue in the industry.
In conclusion, maintaining strict adherence to AML regulations and rigorous KYC procedures is essential for casinos to thrive in the growing online gambling industry and avoid hefty fines, license issues, and reputational damage.
On top of assessing self-exclusion and problem gamblers, maintaining proper Anti-Money Laundering (AML) policies, including thorough customer due diligence (CDD) and verifying customer identities, is vital for casinos to avoid fines and reputational damage. Additionally, casinos must adapt their marketing strategies to ensure they don't promote to individuals on self-excluded lists and conduct financial checks to prevent gambling-related harm and potential fines.
