While no gambler likes losing at the casinos, the risk is an acceptable one. What isn’t acceptable is being cheated by hackers and cybercriminals. Cybercriminals often target online gambling platforms to access customer data like bank account numbers, credit card details, etc. This data may be used to impersonate the gambler and commit financial fraud.
The threat isn’t limited to customers, casinos may also be inadvertently involved in money laundering activities. Fraudsters may use illegally gained money to place low-outcome bets and get laundered money in exchange.
Casinos that have been hacked into risk damaging their reputation too. Hence, the need for online casinos to implement stringent KYC (Know Your Customer) protocols.
KYC for Online Casinos
KYC processes are an integral part of global AML (Anti-Money Laundering) and CTF (Counter Terrorism Financing) regulations. At its core, KYC involves verifying that every customer who logs into the online casino is who he or she claims to be and is eligible to gamble on these platforms.
The customer provides personal information such as their name, date of birth and street address along with documents proving their identity. Players must usually submit a copy of their driver’s license, passport or government-issued ID card as proof of identity.
Players may also be required to submit a selfie as a liveness check. This information is then compared to data from reliable third-party databases to authenticate and validate it. Online casinos may also ask players to submit financial documents proving the source of funds used to gamble.
Once the customer identities have been validated, the casino conducts a risk assessment and assigns a risk rating. For example, customers related to people in positions of political power have a higher risk than others.
Some casinos may take additional measures to monitor the customer’s online activity. By evaluating average bets and spending patterns, they can get a better understanding of players with the risk of developing gambling addiction problems.
6 Benefits of KYC for Online Casinos
As of 2022, there are over 2,000 online casinos with the top online gaming platforms generating over $10 billion annually. KYC processes protect casinos from monetary and reputational risks while simultaneously protecting customer interests. Let’s look at some of the major benefits of paying attention to KYC protocols.
- Build customer trust
Customer trust is invaluable for online casinos. After all, they are sharing sensitive information like the details of their bank accounts. Players don’t mind sharing their personal details but they expect the casinos to protect this information. By verifying customer identities, casinos illustrate their attitude toward keeping customer data safe. They can win the customer’s trust and strengthen their reputation for reliability. This helps the platform attract genuine players and foster good relationships.
- Deliver personalized experiences
To verify their identities, customers need to share details like their names, addresses, date of birth and so on. In addition to using this data to verify identities, casinos can also use it to personalize player experiences.
Knowing the customer’s age, where they live and so on, gives the platform valuable insights into the customer’s behaviour and preferences. For example, a customer’s address indicates their spending power and thereby the kinds of casino games they might be interested in.
Online casinos can leverage this data for personalized marketing campaigns, discounts and a more engaging gaming experience.
- Keep fraudsters away
The lower the security protocols, the more attractive a database is to fraudsters. According to a recent report, digital fraud in the gaming sector rose by about 33% between 2021 and 2022.
When the KYC process is applied to all customers, it acts as a deterrent for cybercriminals. Fraudsters realize that they cannot hack into the online casino as easily as they would like. They cannot use fake or stolen identities to create player profiles. This makes it harder for them to engage in illegal activities through the platform.
- Easier regulatory compliance
Like brick-and-mortar casinos, online casinos must comply with gaming industry regulations. All players must be above the age of 18 years and gamble with legally obtained funds. Allowing underage gamblers to place bets on online gambling platforms could put them at risk of having to pay hefty fines.
An Australian gaming company, Tabcorp was fined $45million for non-compliance. This can be easily prevented by conducting thorough KYC checks on all players before they can place a bet online.
- Enhanced player data security
In addition to verifying customer information, KYC protocols also prioritize data security measures for the player’s personal and financial information. To keep data secure and comply with data protection laws such as the General Data Protection Regulations (GDPR), online casinos store data in secure databases with limited access.
The data is encrypted to prevent unauthorized access. These measures protect data and minimize the risk of data breaches.
- Take a proactive risk management approach
KYC procedures should not be looked at as one-time operations but rather as ongoing activities. Keeping an eye on player information and the pattern of their online activities helps casinos identify unusual activities or suspicious patterns that may be linked to fraud.
Casinos may conduct additional checks before players place uncharacteristic bets. Adopting a proactive approach like this toward risk management helps online casinos minimize their exposure to cybersecurity threats before they flair up. Thus, it helps create a safe, secure environment for players.
Taking the next step to KYC compliance for online casinos
While KYC compliance is a necessity, the checks must be executed without slowing down the customer experience. Manually checking each customer’s information is slow and inefficient. If KYC checks slow down the customer’s onboarding experience, they may turn to your competitors.
This is where automated identity verification checks come in. The right identity verification tools can seamlessly verify customer details against globally recognized databases. They can also check identities against international sanction watchlists.
With near real-time results, players can enjoy their betting experience while the online casinos protect themselves. It’s the ideal balance between convenience and security.