How KYC and AML Improve Crypto Gaming Security
In recent years, cryptocurrency has known a surge in use, within various fields, including the gambling sector. Online casinos throughout the world have adapted to this blockchain technology and included cryptocurrency as their payment method.
Nonetheless, innovation could potentially come at a great cost if there are no strict procedures to guarantee safety and security to both gambling platforms and online customers.
This is where KYC and AML step in! Both of them are meant to impose thorough checks on any client that is looking to become a casual player and, ultimately, to diminish the potential threat of a financial crime.
The risks of blockchain gambling – Choosing the safest casinos
Right from the start, using cryptocurrency for transactions at an online casino may come with certain risks. Since we are talking about significant sums of money that are put into the gameplay, there is a risk of money laundering that, in the end, could affect both the casino and its players.
This is why the safe brands analyzed so far, automatically come with the mandatory condition to perform the KYC check. Once this and the AML examination are completed, you can rest assured that your crypto use is secured!
Let’s see what exactly they bring to the table!
AML compliance – why is it necessary?
For starters, AML (Anti-Money Laundering) is comprised of legal procedures that are meant to impede any form of financial fraud or crime. To achieve this, the online gambling platform must inspect the player’s financial transactions and signal if there are any potential threats that could eventually compromise the entire company.
How does it work?
Now, when a client chooses a regular deposit or withdrawal method, the verification process is pretty straightforward. They must present a bank statement of that particular service they wish to employ. However, since blockchain technology does to pertain to any bank, per se, there is no 'middleman' to confirm if the personal data provided is actually real.
And, since every transaction is carried virtually, it’s very easy to launder money without even getting tracked. So, as the ultimate method of precaution, gambling companies must perform customer due diligence while onboarding.
Its absence makes way for fraudulent activity that could potentially lead to million euro losses and the shutdown of the company. As you will see later on, similar to the KYC procedure, these verifications never end. They are conducted on a regular basis, even if your first check was successful. The reason behind this is, once again, to guarantee that the collected data is accurate and, more importantly, that there are no suspicious transactions to worry about.
What does KYC stand for?
KYC (Know Your Customer) is a verification procedure conducted by online gambling platforms with the ultimate purpose to prevent any attempt of identity theft or money laundering.
This is done very thoroughly and can take up more than one day to be completed. Customers don’t have any access to deposits, withdrawals and, in some cases, the entire casino website until their details are confirmed. Moreover, these checks are performed on a regular basis to endure that the player's identity and personal data have remained the same as in the beginning.
How is the KYC check achieved?
The KYC check stands as the cornerstone of AML compliance. So, it’s fair to say that gambling operators will leave no stone unturned and inspect every Personal Identifiable Information provided by the player through an official document (driver’s license, utility bill, etc.)
These details include: name, current residence, date of birth. This procedure is also enforced by some regulatory bodies, such as the United Kingdom Gambling Commission who made it part of its license acquiring mandatory conditions.
KYC as a marker of trust
The Know Your Customer check does not only protect an online casino from possible fraudulent attacks but also confers a high degree of trust in that particular gambling website. And this is a great achievement, especially for platforms that included cryptocurrency as part of their payment methods.
For those sceptical about using blockchain gambling, this is truly a boost of reliability and confidence that the online casino website is taking its customer data protection seriously.
How do KYC and AML guarantee safer crypto gambling
Now that you have become accustomed to the terms KYC and AML, it’s time to see, in detail, how they actually affect blockchain gambling and to what degree they provide more safety.
KYC and AML enforce the security
First of all, safety and security are achieved through onboarding checks and subsequent and permanent verifications of the customer’s personal data.
AML and KYC procedures must include the documentation of the customer’s identity, the casino’s demographics, and the transactional activity, along with risk management. These are actually known as the CIP (Customer Identification Program) and CAP (Customer Acceptance Policy).
And to truly understand how strict these measures are, in most cases, players even have to take a photo of themselves and send it in, together with the other official documents to prove their identity. This is also done to prevent any attempt at underage gambling. Of course, there are numerous other aspects that are due to be implemented.
How are they improving today?
AML and KYC are constantly regulated and revised to improve their effectiveness.
In fact, the European Commission has recently released a proposition for its 6th AML Directive that is set to fight against money laundering and the financing of terrorism.
This is a great step for crypto gambling, as they leave no room for mistakes, and any player can enjoy its gameplay safely!