Understanding KYC, AML & Its Importance for UK Gambling Industry
The gaming industry keeps on growing incessantly and its value is going to reach 295.63 billion by 2026. Furthermore, Covid-19 has also made its contribution to its growth since the number of online games has grown by 17% only in the UK, let alone other countries.
No wonder that the protection of players and their winnings is under strict control in the UK. In fact, this country is known for the most trusted gaming licenses and utmost regulation of online casinos, so it is not difficult to find a list of legal online casinos in the UK. It introduces different practices to maintain transparency in the gambling industry and KYC and AML are among them too. Not all gamblers have a clear understanding of how these practices help to protect them, so let’s look closer at the definitions and find out their significance for the UK gambling industry.
What is Know Your Customer (KYC)?
KYC is an abbreviation translated as Know Your Customer and this is a practice executed by companies to verify players’ identity in compliance with legal requirements and regulations. This process helps to prevent financial crime and confirm that a client is exactly the person who it claims to be. It allows flagging potentially risky users and monitoring for any suspicious activities.
KYC is also known as Enhanced Due Diligence in the Gambling industry too. Casinos collect players’ Personal Identifiable Information and copies of official identity documents to ensure that the information provided by the player upon registration coincides with data contained in the documents. It allows preventing money from being washed through different gambling establishments and detecting underage players if there are any. Other reasons to introduce this practice is to identify players who play using multiple accounts or ones included in the lists of self-excluded gambling addicts. The last ones can be found through running users against existing lists for their identification. Consequently, this way of getting user personal details protects casinos from being used for criminal purposes in general.
KYC verification procedures are considered the strictest in the UK. They are also known as Threshold Verification that must be completed by every gambler who registers an account. There is no chance to complete this process later like in other countries, so everything should be done upon sign-up.
Defining Anti-Money Laundering (AML)
AML is translated as Anti-Money Laundering and it remains one of the major regulations for gambling companies nowadays. In fact, every industry has AML laws, but they are especially strict in the sphere of casinos.
Every company should develop an AML compliance program to prevent betting from being a source of crime. This program should define the way the company is going to detect, access, and report all financial crimes. KYC is an integral part of AML too.
The UK is famous for high AML compliance standards based on the Proceeds of Crime Act. The main regulation documents adopted in the country are the Gambling Act and the 4th and 5th European Anti-Money Laundering Directives. They are widely known for rather strict requirements to the casino service providers, transparency of their operation, and the protection of vulnerable players.
Companies that do not correspond with AML obligations are fined and the amounts of these fines are really overwhelming. For example, the Gambling Commission filed a £5.9 million penalty to Ladbrokes Coral for systemic failings to protect problem gamblers from monetary losses. The general amount of penalties given by AML to operators in 2020 was over £40 million.
Why are they important for UK Gambling?
Gambling is an industry with a high probability of financial crimes. There is always a threat of terrorist financing attacks and money laundering in the spheres with a large pool of funds. One of the most common methods to launder money is making low betting transactions through the companies that offer betting services, but there are many other ways too.
There are many risks existing in this sphere and the implementation of AML and KYC controls help operators to assess them and prevent possible crimes. Not all gambling industries have a full understanding and can identify all the possible weaknesses to keep crime from gambling. However, the UK Gambling Commission puts much effort to track the operation of all licensees and secure players from any illegal issues. Therefore, these are UKGC-licensed casinos that are considered the safest to play in the world!