Why Do Bitcoin Casinos Follow KYC & AML Procedures?

Mar 30, 2018
Why Do Bitcoin Casinos Follow KYC & AML Procedures?

People may notice that some licensed online casinos require players to submit important documents before they can deposit or withdraw any money. This is because of the Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations that casinos need to follow to operate in certain jurisdictions as well as to protect their businesses from fraudulent activities.

There are, however, questions that average casino players are still clueless about. How can KYC and AML procedures protect online gaming sites from illegal activities? What are the steps that regulated operators need to follow in order to comply with these regulations?

Goal of Anti-Money Laundering Regulations

KYC vs AMLComplying with KYC and AML regulations can decrease criminal activities from around the world. Businesses can stop the funding of terrorist groups or dangerous organizations that require a clean cash flow.

It is easy for anyone to convert ill-gotten money into legitimate funds using an online wagering site. The simplest method is to transfer the money from one account to another and then withdraw the funds from the secondary account.  Others may deposit their money into an account in an online casino, make a small wager, and withdraw their bankroll to collect their illegal funds. This is why regulatory bodies such as the Malta Gaming Authority (MGA) and UK Gambling Commission (UKGC) require license holders to comply with these AML regulations.

Difference between KYC and AML Regulations

Businesses follow KYC procedures to verify a customer’s identity. This procedure helps any establishments make sure that they will be giving the money to the right person. This also verifies that the money the customer uses did not come from illegal activities. Customers can verify their identities with legal documents that show a person’s full name, birthdate, and permanent home address.

Businesses can determine the risks customers pose by verifying the latter’s identity. KYC procedures also discourage criminals from conducting their businesses. People looking to launder their ill-gotten money through a business will not risk attaching their real identity to any criminal activities.

Meanwhile, AML procedures are meant to further prevent and detect any threats of a money-laundering scheme within an online business. AML actions can help identify criminals that may use forged documents to bypass KYC protocols. These actions include monitoring all transactions and reporting any suspicious customer activities.

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How Gaming Operators Comply with Regulation Procedures

Many online gaming sites follow KYC regulations by requiring new customers to provide personal details when registering an account. Other websites allow players to use only their email address to create an account, but often require them to enter their personal details to perform other actions like making deposits or withdrawals.

To make sure that the information provided by the players is true, operators require account holders to send certain legal documents. These documents are often a withdrawal requirement set by operators. Players who failed to meet with the requirement or those who provided a forged document will risk having their money confiscated by operators.

Other preventive measures that operators implement to comply with AML procedures place limits on how much a player can deposit and withdraw at a certain period. Another is restricting people from certain regions to access the casino. These help further discourage the use of the casino for any laundering scheme.

Operators implement other AML protocols to identify any potential criminal activities. These include monitoring all player activities and reporting any potential threats if found. In addition, staff of online casinos needs to undergo money laundering awareness in order to spot these threats.

Casino operators need to establish a system on how the staff can report threats. Staff members are also required to keep a detailed record of a player’s activity. If a casino successfully catches a threat and reports it to the proper authorities, any stolen funds can be recovered by an individual or an establishment. This process can also stop the funding of terrorists that require legitimate funds for their operations.

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