A New Focus on Digital Identity Verification in Gambling

As the gambling industry continues to evolve, Anti-Money Laundering (AML) and Know Your Customer (KYC) processes are increasingly critical. These protocols not only combat financial crime but also ensure compliance with gambling regulations and enhance player protection. In 2024, the focus is shifting from simply adhering to regulations to improving customer trust and experience, especially in sectors like online gambling, where fraud and money laundering risks are heightened.

Recent research from Luke ARC partner FullCircl, surveying 1,000 UK consumers, offers valuable insights into public perceptions of digital identity verification. The findings highlight the need for gambling operators to strike a balance between robust compliance measures and smooth, user-friendly onboarding experiences, which is especially important in an industry where friction in registration processes can drive players away.

Emerging AML and KYC Trends for 2024 in Gambling

As we move through 2024, several key trends are shaping the future of AML and KYC within the gambling industry. Technology, regulations, and shifting player expectations are transforming how these processes are implemented in gambling operations, from sportsbooks to online casinos.

1. The Need for Digital-Focused IDV Processes in Gambling

Digital identity verification (IDV) is becoming a cornerstone of KYC processes for gambling operators. With identity fraud accounting for 64% of all fraud losses in the UK, compliance teams in the gambling sector face increasing pressure to implement robust verification processes to protect against fraud and money laundering.

FullCircl’s research found that 47% of consumers have undergone digital identity verification in the past 24 months, with 78% being asked to upload a photo ID during the process. Given the fast-paced nature of gambling, players expect quick and secure onboarding.

2. AI and Machine Learning: Game Changers for AML in Gambling?

Artificial Intelligence (AI) and Machine Learning (ML) could transform AML and KYC processes in the gambling industry. These technologies enable operators to sift through vast amounts of player data, identifying patterns that suggest fraud, money laundering, or problem gambling behaviours with greater speed and accuracy. Although AI is still untested at a large scale and remains in relative infancy as to whether it will truly be a drive of change.

FullCircl’s survey highlights the importance of speed, with 70% of consumers unwilling to spend more than 10 minutes on account opening. For gambling operators, players expect instant access to gaming platforms, making efficient onboarding vital for both customer satisfaction and compliance.

3. Data Analytics: Building a Full Player Profile

Data analytics are becoming a crucial element of KYC and AML strategies in the gambling industry. By integrating data from financial records, global watchlists, and gambling patterns, operators can gain a more comprehensive view of their players, identifying high-risk individuals and suspicious transactions.

Real-time monitoring of player behaviour is essential to ensuring compliance with regulatory standards, detecting problematic gambling, and mitigating risks. With increasing concerns over data privacy, operators that can demonstrate transparency and security in how they handle player data will build greater trust with their users.

Shifting Player Expectations in the Digital Gambling World

Digitisation has raised the bar for player expectations in the gambling industry. Today’s players not only expect gambling platforms to be compliant with regulations but also to offer quick, seamless, and secure experiences.

FullCircl’s survey found that 32% of consumers have abandoned an account opening process, with 50% citing lengthy applications as the primary reason. For gambling operators, this means that player onboarding must be not only compliant but also efficient. Automation and IDV technologies will be crucial in streamlining the process and ensuring players aren’t frustrated by delays or cumbersome KYC checks.

Regulatory Developments: Navigating Complexity in Gambling

The regulatory landscape for gambling is becoming more stringent globally, with authorities intensifying efforts to combat money laundering and problem gambling. In the UK, for instance, the Gambling Commission has released the long-awaited gambling act review, requiring operators to dramatically change their approach to safer gambling. As of 30th August, all players who exceed net deposits over £500 will be required to screened against financial vulnerability checks also covered previously in the Luke ARC blog.

Globally, tighter regulations and heightened scrutiny of gambling practices are creating a more complex compliance environment. Operators that fail to keep up with these changes risk not only severe fines but also reputational damage.

Tools and Solutions for Staying Ahead of AML and KYC Compliance in Gambling

To stay ahead in this rapidly evolving landscape, gambling operators are increasingly turning to advanced tools and strategies. Here are some of the most effective solutions being adopted:

1. Automated KYC Software: Automated KYC tools enable gambling operators to verify player identities quickly and accurately. As 70% of consumers are unwilling to spend more than

10 minutes on account opening, according to FullCircl’s survey, automated KYC can significantly reduce onboarding time while maintaining compliance.

2. Fraud and AML Screening: Comprehensive fraud and AML screening tools are essential in gambling, where financial crime risks are high. Unified platforms that integrate global sanctions, Politically Exposed Persons (PEP) lists, and adverse media reports can help gambling operators prevent financial crime throughout the player lifecycle.

3. Digital Identity Verification: IDV tools that leverage biometric identification, and other advanced technologies offer quick, secure verification for players, reducing the risk of fraud. FullCircl’s survey shows that 59% of consumers prefer having options in their verification methods, underscoring the importance of flexibility.

4. Ongoing Monitoring and Perpetual KYC: Continuous monitoring of player accounts and behaviours is key for detecting suspicious activity and remaining compliant with gambling regulations. Advanced monitoring solutions provide gambling operators with real-time updates, ensuring that they can react swiftly to changes in risk profiles.

Collaboration with RegTech: A Critical Partnership

The gambling industry is increasingly partnering with RegTech companies to enhance AML and KYC efforts. The RegTech market is projected to grow at a CAGR of 19.2% over the forecast period between 2024 and 2034. These partnerships allow gambling operators to adopt the latest compliance technologies, from AI-driven monitoring to real-time account opening and safer gambling checks, ensuring they stay ahead of financial crime and regulatory changes.

Building Trust with Players

In the highly regulated gambling industry, trust is paramount. FullCircl’s research reveals that 70% of consumers trust traditional banks, but only 2% trust gambling operators. Gambling operators must prioritise transparency and security to build trust with players, especially in a sector often scrutinised for fraud and financial crime risks.

How FullCircl Can Help

As the gambling industry faces increasing AML and KYC challenges in 2024, FullCircl is at the forefront, providing cutting-edge solutions to help operators stay compliant while delivering a superior player experience. Our suite of AML, KYC, and IDV tools helps operators navigate this evolving landscape with ease, building trust and enhancing security for both operators and players.

If you want to learn how FullCircl can help redefine your AML, KYC, and KYB strategy in gambling, book a demo today wit FullCircle or speak to Luke ARC for an introduction!