KYC and AML are two acronyms that play important roles in online casino regulations. If you are opening an account with an online gambling establishment, it’s important to understand what these abbreviations stand for and how they impact your gaming.
What does KYC and AML stand for, and should you be concerned about them?
What Do KYC and AML Stand For?
The abbreviations KYC and AML refer to regulations designed to prevent money laundering. These regulations apply not only to casinos, but also to banks and other financial institutions.
Specifically, the AML and KYC abbreviations stand for the following:
Anti-Money Laundering (AML)
Anti-Money Laundering, or AML, regulations are put in place to prevent criminals from laundering money through casinos and financial institutions.
AML includes a wide range of responsibilities and processes that gambling institutions must implement to legally operate.
The Proceeds of Crime Act 2002 (POCA) is the main AML regulation in the UK. POCA requires casinos, banks and other financial institutions to implement AML controls to detect and prevent money laundering activities. These controls include:
- Transaction monitoring.
- Customer due diligence.
- Reporting requirements, such as submitting suspicious activity reports (SAR) to the National Crime Agency whenever potential money laundering activities are detected.
Failure to comply with AML regulations can lead to fines or imprisonment for the casino.
Know-Your-Customer (KYC)
Simply put, Know-Your-Customer, or KYC, is the process of verifying customer identities. KYC requires casinos and betting companies to ensure that their customers are being truthful about their identities.
Casinos and online gambling entities run background checks or use other processes to verify customer identities when they sign up for accounts.
Identities may be verified using government-issued identity documents or Personal Identifiable Information (PII), such as:
- Proof of address – Utility bill, council tax bill, lease agreement or bank statement
- Proof of identity – Passport, national ID card, university ID card or driver’s license
- Proof of bank account ownership – Scanned copy of the card or a bank statement
Documents needed to verify identities will need to be uploaded to the online casino’s website and verified by the establishment before the user can start depositing or withdrawing money. Online casinos must receive third-party, independent verification of these documents to ensure their authenticity.
These third parties may also run the information through global databases to make sure that users:
- Aren’t people holding positions of political power, known as Politically Exposed Persons (PEP).
- Don’t have financial sanctions that may harm the casino.
In some cases, users may be required to provide additional documentation to verify their identities or sources of income.
Proper KYC procedures fulfill the Customer Due Diligence and Enhanced Due Diligence requirements of AML programs.
The purpose of KYC is to prevent money laundering through gambling establishments, but it can also help casinos exclude:
- Underage users
- Gamblers who have added their names to self-exclusion lists
- Users attempting to play with multiple accounts
KYC processes help protect casinos from inappropriate users and prevent money laundering in the process.
UK’s stringent verification procedures are known as Threshold Verification, and they must be completed immediately upon the opening of an account. UK customers cannot deposit money or start gambling until their identity is confirmed.
Should You Be Worried About KYC and AML?
When opening an account with an online casino, some users may be apprehensive about providing personal details. Data breaches are a valid concern. However, it’s important to remember that casinos are required by law to implement AML and KYC processes.
By law, online casinos that serve UK customers must comply with the GDPR data protection regulation. The GDPR requires data to be stored in UK-based servers. Customers must have access to this data whenever they want, and they can request to have this data deleted if they wish.
If you’re in the UK, KYC and AML regulations apply regardless of where the online casino is based. The casino must comply with the local rules and regulations of the user’s home country.
Although identity verification adds an extra step to the process of signing up for an online casino, the steps are simple and straightforward. Users only have to go through the verification process once, and automated processes are speeding up the process. Most users will only have to supply basic verification documents to get through this step.
Still, many users are concerned about providing personal information to online casinos regardless of whether they are licensed and simply following regulation requirements. Customers are rightfully concerned about protecting their personal data. Some online casinos are finding ways to allow users to play without having to go through a lengthy verification process.
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