Play by the compliance rules

The most difficult thing about newly regulated markets is that there are so many of them at the moment. The first thing to do from a regulatory and compliance point of view when entering a new market is to explore the regulatory regime of that specific jurisdiction. When doing so, it is important to identify challenging areas where the most attention needs to be focused. This includes areas where operators need to enhance and strengthen their internal procedures, systems of control and reporting. Although all these separate gambling regulations exist, one thing they all have in common is rigorous know your customer (KYC) requirements. Gambling operators depend on efficient and accurate onboarding of their players to help mitigate risk and ensure compliance with domestic and international AML regulations. I believe that the key to success and business growth lies in the balance between intensive and strict regulatory requirements – for conducting a thorough KYC check in the most efficient manner – and minimising the hassle for the players to avoid jeopardising the customer experience and revenue opportunities. Current EU AML regulations require operators to apply an evidence-driven, risk-based approach to be able to demonstrate the rationale behind their decision making. This, in a way, makes the KYC and CDD process more time consuming. As a result, the integration of automated solutions, of onboarding and monitoring tools driven by artificial intelligence is vital nowadays, especially if the company aspires to be a leader in the industry.

Strong compliance credentials

The more a business grows, the more markets it enters. This is positive but having more services on offer makes it challenging to follow local and international compliance requirements, particularly when these services become more complex. However, this can benefit the company over the long-term. The most obvious consequence of strong compliance is that it decreases the company’s risk of fines, penalties, lawsuits, damages to the reputation and even closure of the business. I would also add that a negative perception of the business in the public eye from a compliance and AML point of view can be detrimental to the organisation. We have seen enough scandals where business’ reputations have been laid low as a result of such activities and the potential negative results are increasing. Gaming companies that follow the rules, pay attention to AML procedures and invest in educational and awareness campaigns promoted by regulators are invariably more trustworthy in the eyes of their players. It has been our experience over and over that the public is more likely to open an account with a well-regulated operator. It is not difficult to see why – players naturally want to make sure that their funds are safe and not in the hands of an operator that might abuse or swindle them.

Crypto betting

The main goal of AML in gambling is to prohibit players from using funds that originated as a result of illegal activities on gaming websites, making them “clean” upon withdrawal from the gaming account. This is called layering, i.e. adding legitimacy to money gained by illicit means. Adding a crypto channel to a gaming account actually makes the AML team’s life a lot harder because it’s far more difficult to identify the source of the crypto funds due to its complex nature. However, I am personally against the discrimination of cryptocurrency and think that the fear of such top-up methods is connected to the lack of knowledge of blockchain and crypto, in particular. The best solution is for money laundering reporting officers to educate themselves and learn in practice how to work with crypto. The tendency from the regulators all over Europe is to bring crypto exchanges to the regulatory landscape and make cryptocurrency as “white” as can be. So crypto betting will soon not differ from betting in any other way. As a member of ACAMS, the National Association of Licensed Paralegals, and the Chartered Institute for Securities and Investment, Soft2Bet’s MLRO Ludmila Andrianova has more than a decade of experience in regulatory compliance, having held senior positions such as head of AML at top financial institutions.