It’s time for the gaming sector to up its AML game 

Last month, we saw that yet more UK gaming companies were fined for failing to identify problem gambling and tackle financial crime.

The United Kingdom Gaming Commission (UKGC) meted out penalties to four online casino operators worth a total of £4.5m after investigations revealed that the companies failed to “put in place effective safeguards to prevent money laundering and keep consumers safe from gambling harm.”¹

Among those penalised was InTouch Games, which must pay £2.2m for falling short on multiple anti-money laundering safeguards. Betit was fined £1.4m for failings in its problem gambling prevention protocols. MT Secure Trade and Bestbet were the other two companies punished for similar lapses in due diligence.

These are just the latest in a long series of gaming operators to receive penalties for AML failings. Such stories will continue to make the front pages, unless action is taken now by gaming operators.

Customer due diligence

All regulated entities, including those in the gambling sector, must comply with rigorous anti-money laundering (AML) legislation.

Central to these regulations is a requirement to perform comprehensive “Know Your Customer” (KYC) checks on all new and existing customers. Many gaming operators see this as a standard identity and age verification. However, in order to comply fully with AML legislation, the operator also needs to identify any potential links with bad actors or with high-risk regions, companies and individuals suspected of criminal activity – and, for the gaming industry, they are vital to determine whether customers may be at risk of “problem” gambling behaviour.

To identify such links, these comprehensive “Customer Due Diligence” (CDD) checks should involve regular searches for “adverse information” on new and existing customers. This should mean trawling the so-called “Deep Web”, as well as traditional and digital news media, international corruption watchlists and other such databases, for any data that ties the individual with money laundering or links them with people accused of financial crime. In addition, companies must demonstrate that they have carried out these in-depth searches, keeping a detailed audit trail and provide regular reporting to regulatory bodies.

However, many operators are failing to search all of the necessary data, using outdated and inefficient manual search processes. In doing so, they risk missing key information about their customers.

Gaps in our defences

Money launderers will always target companies with the weakest CDD checks – they are quick to spot this and to spread the word among the criminal fraternity. The result of this is failures in compliance, leading to penalties from regulators, which can have a significant financial impact on their business operations.

However, the technology is already available that can support gaming companies in carrying out CDD checks quickly, efficiently and accurately, thwarting criminals. Advanced regulatory technology featuring machine learning (ML) and natural language processing (NLP), for instance, is capable now of doing the heavy lifting in searching global databases for information on customers as required by AML regulations.

Kompli-IQ, for example, replicates the very best due diligence analyst by deploying such technology. Using more than 500 search terms in multiple languages, the solution can perform real-time searches of the surface and deep web, as well as other key global databases for information on any new or existing customers.

Such augmented intelligence technology can perform multiple CDD checks simultaneously and search 24 hours a day, seven days a week, enabling it to flag any adverse media to human compliance managers the instant it appears, without delay. This technology provides vital information to enable effective judgements about risk – it does not replace, but enhances, the abilities of human analysts.

Time for action

Criminals and money launderers will know the gaming operators that are embracing the latest technology and will target those that clearly aren’t.

With this in mind if operators want to protect their business, they must explore ways to enhance their customer due diligence. The gaming sector has embraced digital technologies in their customer-facing operations – it’s time for them to do the same with their compliance processes. Failing to do so means they will continue to gamble away their revenues and their brand image.

Martin Pashley, Kompli-Global

Martin Pashley is the chief commercial officer at Kompli-Global. He is considered an authority on identity verification, KYC, fraud prevention and anti-money laundering. Pashley has over three decades experience and previously held senior positions within market leading ID verification businesses such as GB Group and was previously the founder and CEO of Intelligent Identity Ltd.