Gambling Regulations: Compliance Concerns to be Aware of

Gambling regulations are not to be trifled with–they affect casinos big and small. Those that fail to maintain adequate compliance can quickly find themselves in an uncomfortable position, with steep fines to pay off and their operating licenses in limbo. Failure to comply with regulations in the gambling industry can lead to financial losses in the tens of millions, as has been the case in high-profile investigations such as that of the Tinnian Dynasty Hotel and Casino.

The pacific island casino was hit with a record-breaking $75 million fine for anti-money-laundering (AML) violations. Unfortunately, they were not the last. Given the laundry list of risks organizations in the casino industry face, many have been fined for failing to adhere to AML guidelines, allowing banned players to participate in games, or not reporting cash outs higher than $10,000. Compliance is key to every gambling organization’s survival in such an increasingly regulated legal landscape.  

Know Your Customer (KYC) Processes Can Be Imbalanced

KYC processes are a standard requirement for any organization involved in cash-heavy transactions. Keeping tabs on the types of customers you have and ensuring you know their actual identities is essential for supporting AML efforts. However, these processes are only as effective as the people who employ them.

Casino staff and even third-party operators in security, catering, etc. must be trained to ensure that KYC strategies work as intended.

Employees of all stripes should be made aware of the fact that all customers are subject to KYC processes and that no special exemptions should be made. Casinos that serve a range of “high roller” clients cannot afford to let their guard down in an effort to cater to their interests. In the online gaming arena, familiar faces may be less of a factor, but large wagers and dubious funding sources should sound alarms for suspicious activity.

Without KYC identity validation processes, imposters and lookalikes could make use of funds they ought not to have access to, resulting in hefty lawsuits and worse. For online gaming operations, there is also a significant threat posed by minors misusing funds belonging to their parents or relatives. The compound issue of underage gambling paired with identity theft can bring about a legal nightmare if no KYC checks are completed before such individuals are allowed to use an online platform.

High rollers may not be particularly enthusiastic about providing their identity information, given the nature of their positions or their reputations, but unwanted attention from the government can prove to be much worse than the risk of turning them away.

High Employee Turnover

High turnover among your personnel is practically a given in any retail organization, casinos included. However, for most retail companies, this turnover presents a fairly low risk to their business model and is thus no cause for major concern. For casinos, this is not the case.

Turnover makes essential KYC and AML training more difficult as new hires must be brought up to speed with the same attention to detail as those they are replacing. A lapse in your training process can spell disaster for your company’s security in the near term, inviting attention from authorities and all manner of legal repercussions.

For online gambling companies, turnover exacerbates the difficulties they may already face in training employees to handle KYC and AML processes in a fully remote context. Underage gambling, problem or addictive gambling and money laundering risks are just as high for online gaming and gambling platforms as they are for physical casinos. Keeping your team trained and well-equipped to handle known issues is a necessity for your gambling business’s long term survival.

Training all hires and contracted third parties to validate customer identity as standard practice can go a long way in staving off risk. Regardless of how frequently a particular client comes in, their ID should be validated in the same way and all necessary reports should be prepared on big-ticket transactions.

Anti-Money Laundering Regulations

In accordance with the Bank Secrecy Act (BSA) of 1970, financial institutions, among which casinos are now included, must report large transactions, appoint an individual to manage compliance processes, and use all available intel to keep track of customer identities under certain circumstances.

These measures are meant to combat a wide variety of money laundering risks inherent to the casino industry in particular. These risks include:

• High roller clients in VIP sections with little transparency
• General high net worth clients from all over the world with insubstantial preexisting customer relationships
• A large number of cash transactions
• Foreign exchange services provided on premises
• Foreign holding accounts for deposited funds to be used at alternative locations in separate jurisdictions

In the case of online casinos and gambling organizations, a unique assortment of risks take center stage. These include:

• No one-size-fits-all solutions to establish and maintain AML compliance
• Identity validation must take place remotely
• Different countries and jurisdictions demand varying ID validation measures be taken
• Security training for employees must adapt to the software and tools used, which may change often

Each of the above risks can result in money laundering accusations, heavy fines, and license revocation if left unmitigated.

Step Toward Greater Security

Just about every risk a casino faces ties into issues with identity. Whether your clientele is big spenders or everyday types, risks abound in relation to them not being whoever they may claim to be. Validating and recording customer identity makes these risks much more manageable. Intellicheck offers the perfect solution.

Accessible via API for full-featured and seamless integration. You can also have it up and running in no time by using our turnkey web portal. Through a combination of facial liveness scanning, ID security feature parsing, advanced analytics, and more, Intellicheck delivers unparalleled 99.9% accuracy wherever you need it.

This ID validation platform plugs into your existing infrastructure to provide quick, effective identity-checking functionality as needed. From major retailers to law enforcement agencies, organizations big and small trust Intellicheck to deliver swift, accurate results, consistently.

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