How can operators avoid AML-related fines?

Michael Gregory
Michael Gregory

The gambling industry is built upon risk and reward; however, betting companies must have precautions in place to promote responsibility to their players, and to protect themselves from fines. These are both integral to the gambling landscape and become even more crucial when considered in a digital capacity.

Undoubtedly, online gambling operators benefit from being able to attract a larger audience but just like brick-and-mortar casinos, they must still ensure that their players are reputable and safe. Unfortunately, when applied with criminal intent, technology can allow digital players to cause headaches for gambling operators.

However, in this blog we’ll share some of the ways technology and other measures can be used by operators to counteract those who aim to take advantage of the perceived anonymity the digital world offers, so they don’t fall foul of AML and social responsibility obligations.

Reconcile to validate transactions which should be investigated

In the world of online betting, players are faceless, so suspiciously large bets need to be investigated. Considering that 26% of the population gamble online, the number of bets placed every second is enormous. Consequently, investigating every one of those transactions which are large sounds like a mammoth task for any individual. Fortunately, as with any activity which seems too big for a person to scale, technology is the answer.

In this instance, one solution to consider is automated reconciliation software like Aurum. It is capable of extracting data from any source and reconciling it in seconds, leaving back office staff with a clear list of verified transactions. As a result, rather than wasting time on investigating unverified transactions, decisions can be made on whether to scrutinize purely those which are verified.

To fulfil AML requirements and not waste resources, automatic reconciliation software (the only way transactions of such great volume can be reconciled in seconds) is therefore undeniably an important piece of due diligence which gambling providers should implement.

Know Your Customer

Despite the virtual nature of online betting, modern technology means that players shouldn’t be completely anonymous to betting providers. The most common way to achieve this is through the various Know Your Customer (KYC) checks.

These come in many forms, including document identify verification and biometric facial recognition. Typically, they are used to establish that a player is of legal age to gamble. However, they can also act as a method to profile how well suited an individual is to gamble responsibly.

Failure to conduct these checks can not only result in underage gambling but also cost adult players extortionately if they have an addiction or are not fully aware of the risks which come with gambling. Operators have a responsibility to such players, especially those who have proactively placed themselves on a list which blocks them from gambling activities.

Whilst KYC acts as a fundamental social responsibility procedure, it by no means makes investigations into large transactions redundant. Even if a player is verified as being who they say they are and have a reputable gambling performance, this doesn’t automatically mean that all their bets are legitimate.

Source of Funds assessments

In contrast to KYC which considers the suitability of betting players, Source of Funds (SoF) assessments study the supply of their gambling finances. It crosses over with KYC by scrutinizing whether an individual’s income will surpass their spending limits but also goes further. It goes to the root of a gambler’s income.

Comprehensive SoF analysis can highlight where funds originate from, alerting betting companies to potentially close accounts if players’ money is sourced from locations which feature near the top of Basil’s AML Index.

In the context of AML, it is impossible to understate the importance of this check; online gambling has such a high risk of facilitating money laundering that the FBI has purposefully raised awareness of this threat. Fortunately, once more reconciliation software such as Aurum can be of assistance.

Thanks to being able to extract, transform and reconcile data in seconds, Aurum provides gambling operators with masses of data regarding their players’ transactions which they couldn't normally see, including the location of their funds. By adding context to transactions, reconciliation software can therefore alert gambling firms to players who might pose a greater risk of conducting fraudulent activities.

Lack of comprehensive policies and procedures

Writing comprehensive policies and procedures to counter AML becomes significantly harder when individuals do not have time to create them. For the Gambling Commission, they rightly want time dedicated to this no matter what. However, if betting companies are forever manually reconciling their transactions, or wasting time on other antiquated processes, it is difficult to find time to produce protective policies, let alone ensure their fulfilment.

This is by far the least technical recommendation; however, all of the others are only valid if this one is committed to. In this instance, commitment means not only drafting what appropriate action should be, but also ensuring that it is taken should players be found to be breaching any rules.

An industry-wide responsibility

Gambling is meant to be a fun experience, never one which goes too far and causes harm. This is the case for betters and gambling companies alike.  

Without correct precautions in place, operators are at risk of handling laundered money and putting some of their customers in potentially precarious situations. The graveness of these scenarios should be obvious but since the beginning of 2022, the Gambling Commission has conducted 26 enforcement cases to reinforce the responsibilities which operators of all sizes have.

As experts in transactional data, here at Aurum we play a vital part in upholding financial controls and regulations for various gambling operators. We achieve this in various ways, including verifying transactions in an audit ready format, enriching them with data, and priming them for investigation should they present any suspicious characteristics.

If you’re a betting firm and are seeking reassurance on complying with AML and social responsibility rules, get in contact with us at Aurum to clamp down on criminal funds potentially entering your business.

Book a demo now.

Michael Gregory
Michael Gregory

Business Development Manager

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Heading up one of Aurum's largest verticals, iGaming, Michael Gregory has a lot on his plate, just like the financial teams which he helps by reducing their transactional overwhelm. 

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