Identity Verification on iGaming Sites: a Detailed Guide

Registration on the Gambling Platform

This is the process of entering personal data into an online casino, checking it, and providing access to the portal. It should be safe and as comfortable for players as possible but, at the same time, provide comprehensive information about clients.

The entertainment resource may request:

1. Contact details. These are a nickname in the messenger (most often, Telegram), phone number, and e-mail address.
2. Identification documents. This is an internal or foreign passport, ID card, or driver's licence.
3. Confirmation of the residence address. It includes bank statements, copies of utility and telephone bills, home or car insurance certificates, as well as a lease agreement.

The registration process, like the iGaming sector as a whole, is on a path of ongoing transformation. For example, the provision of documents confirming the address can be replaced by checking the player’s geolocation via a special function. This step will simplify and speed up access to the casino, making it much more convenient for users.

Registration on a gambling platform is closely related to the KYC method. Just 5 or 7 years ago, operators simply needed to collect information about the audience. Today, they are required to conduct thorough testing, the main task of which is to make sure that players on the other side of the screen are real and adult.

What is KYC in the Online Casino Industry

This is an acronym for “Know Your Customer”. The method is often called “enhanced verification” when talking about iGaming sites. It is a comprehensive analysis of user accounts, including location, sources of funds, and other factors.

The introduction of KYC tools is a mandatory requirement of all regulators. Even at the stage of obtaining a licence, entrepreneurs need to provide a detailed description of the mechanisms that will be used to identify casino visitors. Otherwise, the special commission can easily reject the filed application.

Gambling is classified as a high-risk activity. To work legally and safely, operators should not only add KYC identifiers to their platforms but also implement proper CDD tools.

The main tasks of Customer Due Diligence are:

• identification of clients;
• studying the relations with players and developing risk profiles;
• monitoring suspicious behaviour patterns and transactions.

Advantages of Implementing KYC Mechanisms

The key benefits of embracing such a policy are:

1. Identification of gamblers. We mean not only standard passport data verification but also checking the absence of a particular user in the lists of self-excluded persons, etc. Using KYC, it is possible to confirm the geolocation of players. This will protect the casino from accepting bets from abroad, especially from those countries where entertainment for money is illegal.
2. Customer profiling. It helps entrepreneurs build relationships with each identified group of clients. Analysis of their preferences and behavioural patterns is important for the detection of gambling addicts and people at high risk of developing ludomania.
3. Protection against fraud. The iGaming niche faces hacker attacks, theft of confidential data, and bonus hunting more often than other sectors of the economy. The implementation of the KYC strategy increases the effectiveness of the fight against offenders.
4. Compliance with legislation. The variety of legal nuances in different regulated markets may create difficulties, especially in the field of user identification. The KYC option allows operators to streamline the registration and verification procedure. The mechanism takes into account the laws of different jurisdictions.
5. Management of financial flows. Installation of the tool prevents such serious violations as money laundering and sponsoring of terrorism, as well as reduces the number of chargebacks and blocked payments. In this case, entrepreneurs can work within the legal framework and effectively distribute their funds.
6. Improved image. The implementation of KYC procedures ensures that the firm operates in accordance with international standards and principles of sustainable development of companies (ESG).

International Practice

In the business world of Europe and the USA, the KYC abbreviation appeared in the early 2000s. In official documents, this concept began to be used much later. The FinCEN introduced such formal requirements only in 2016.

The impetus for this decision was the strengthening of the fight against international terrorism and money laundering. First, mandatory KYC scanning was used by banks, insurance funds, and financial organisations. After that, other sectors of the economy followed their example.

As the iGaming vertical develops, the implementation of these mechanisms becomes a priority task for entrepreneurs.

A comprehensive check of players from international jurisdictions is the main difficulty for businessmen. Let us say, there is an online casino licensed in Costa Rica. The country is characterised by good working conditions, including in the field of user verification.

When a gambling platform is visited by clients from another region, stricter KYC methods are automatically applied.

Failure to comply with identification rules is threatened with fines, court proceedings, and reputation loss. Recently, the Betfred British provider had to pay £2.9 million. The company was accused of violating the requirement in relation to the client’s checking.

Let us consider how KYC policies are implemented in different countries.

The USA

The American Gaming Association (AMA) controls user verification carried out by casino owners.

In 2021, the organisation updated its KYC methods and obliged providers to request the following data from customers:

• full name and official identification (driver's licence or ID card);
• address of permanent residence;
• social security number.

The AMA rules are applied mostly to gamblers and not to entertainment platforms as such. If, for example, a US citizen decides to visit a foreign betting website, they will still have to provide all the information according to the regulator’s list.

Such aspects as the fight against fraud, money laundering, and terrorism financing are within the competence of FinCEN. The organisation is responsible for monitoring compliance with KYC principles in accordance with the Bank Secrecy Act (BSA).

Basic requirements for digital casinos:

• submission of Suspicious Activity Reports (SARs) for unusual transactions of more than $5,000;
• information about money transfers from $10,000 and above;
• mandatory record-keeping and storage of all receipts;
• passing additional inspections when receiving a loan in the amount of more than $10,000.

Online gambling establishments with a GGR that exceeds $1 million are classified as NBFIs. They must follow the same rules as banks to prevent financial crime and money laundering.

Great Britain

KYC requirements in the United Kingdom are extremely strict for several reasons:

1. Prevention of access to entertainment resources for minors. The age limit in the country is 21 years.
2. Fight against ludomania. During the KYC verification, the client’s data is compared with self-exclusion lists.
3. Detection of high-risk candidates. Such players, for example, may hold political decision-making posts (have the PEP status) or be subject to financial sanctions.

KYC rules in the UK, known as Threshold Verification, require all users to undergo identification at the stage of creating an account in an online casino. This approach differs from the global practice, where the validation process starts when making the initial deposit or withdrawal of prizes.

European Union

Checking of players is regulated by the following documents:

• The Fifth EU Anti-Money Laundering Directive (5AMLD);
• Money Laundering Prevention Act (in Malta).

These 2 regulations define the general provisions that EU members follow.

AML rules are less strict compared to those of the UK or the US. Thus, only payments of more than €2,000 are subject to mandatory verification. Anything below this threshold is the operator’s responsibility.

Innovation in the Field of Identity Check

This process does not stand still. New and effective KYC mechanisms are emerging in different parts of the globe.

Biometric Verification

Special systems use people's unique physical or behavioural characteristics to confirm their identity. The technology provides an increased level of security and accuracy compared to such traditional methods as passwords or PIN codes.

The procedure is carried out using the following types of data:

1. Fingerprints. They are a common phenomenon in the modern world since people often use them to unlock doors, phones, laptops, and other devices.
2. Face. The technology compares distinctive facial features with information stored in the system, such as the shape of the chin, the distance between the eyes, and the width of the nose. The basis is the data obtained by scanning the customer’s documents (a driver's licence, an ID card, etc.).
3. Voice. The program compares the gambler's vocal print with saved samples, dividing it into frequencies. First, the user uploads a phrase or word, after which the system asks them to repeat it to provide access to the personal account.
4. Typing pattern. In this case, the keystroke dynamics are tracked.
5. Signature. The program analyses the signature-creation process and scans it for authenticity.

Digital Verification

This method is applied by many foreign online casinos.

To confirm their identity, clients need to perform the following tasks:

• upload a photo of their ID card or a passport;
• add a selfie so that the system can determine the document’s validity.

Digital verification is common on mobile and betting platforms. The process takes just 10 or 15 seconds, which is very convenient for visitors to iGaming sites.

Open Banking

This is a method of providing secure and limited access to a customer's bank account with their permission. It is provided through an application programming interface (API) and in accordance with PSD2 (European Payment Services Directive).

The solution allows players to:

• share information on the account and transaction to identify individuals and complete a comprehensive risk assessment;
• conduct money transfers and initiate payments without providing bank card details.

Operators, in turn, can:

• check the identity of gamblers and whether they have a personal account;
• receive full data, including sources of income, use credit funds for the placement of bets, etc.;
• detect people who may suffer from ludomania.

Modern Online Casino Software

The product contains a set of measures for:

• timely user identification;
• client profiling based on their preferences and risk groups;
• conducting AML scanning, etc.

Software acquisition solves a wide range of problems related to the fight against fraud and compliance with industry regulations. The solution often comes together with biometrics tools for reliable customer verification.

High-quality and multifunctional security service is presented in the product range of the following brands:

• Alfa Protection;
• Feature Space;
• TransUnion;
• Afimac;
• Yoti;
• Accertify, etc.

Open Banking is gaining momentum in the gambling market.

Klarna is the first payment provider to integrate the technology into its proprietary app. Similar options can be found in the assortment of other top companies, including the Ukrainian PrivatBank.

The Main Things about the Identification Process in Online Casinos

Key features of the tool:

• The introduction of such mechanisms increases the portal’s reliability, protects against fraud and money laundering, and guarantees more efficient management of financial flows. The solution is also used to profile gamblers.
• Authentication of players is carried out based on contact details, identification documents, and proof of residence. Mobile casinos and betting resources also use geolocation to ensure that their clients are located in a country where the placement of bids is considered legal.
• Biometrics and open banking are key innovations in the field of user identification. Operators can also launch digital checks.
• Security software often includes a verification module. Such certified products are presented in the assortment of top vendors.

The solution has the following main characteristics:

• 3 versions: for land-based locations, desktop sites, and mobile applications;
• access to popular content from Playtech, Gaminator, Igrosoft, and other providers;
• flexible settings (RTP percentage, modification of bets, etc.).