Know Your Customer Regulations

Online gambling sites provide fun through casino games and handle deposit and withdrawal transactions. With money flow comes the need for fraud prevention solutions and anti-money laundering laws for the global gaming market. Hence, online gambling platforms (and sports betting sites) must initiate KYC compliance for their players.

KYC processes exceed customer identity verification on an online gambling platform. Instead, it is an ongoing process that monitors regular gamblers for digital fraud detection and suspicious activity. Non-compliance with these regulatory requirements can potentially lead to the closure of online gambling operators.

The KYC and AML regulations originated from the Bank Secrecy Act for all financial institutions. Today, these are essential in regulating the online gambling industry and preventing underage gambling, money laundering, problem gambling, etc. We’ll review the standard KYC procedures for customers in the online gambling market and how you can stay compliant.

By Adiela de Bruyn - Updated 2024/02/08 - Estimated reading time: 7 minutes.

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Know Your Customer Regulations

Know Your Customer (KYC) Regulations

Online casinos may not be financial institutions like banks, but they are bound to KYC and AML rules because they conduct transactions. Without these, a player could deposit money into their online casino account, travel to another location, and withdraw. That can easily result in money laundering under most regional laws.

Know your customer regulations involve procedures where customers get to know their customers. The procedures range from identity verification to regular monitoring to identify spending patterns and fraudulent activities. Hence, all online gambling companies must implement KYC compliance for their services.

By regulation, online gambling organizations can monitor customer accounts to ensure regulatory compliance. While KYC serves to prevent online fraud, identify financial criminals, and deter money laundering, it also protects customers.

Casinos in the US can always fall back on the American Gaming Association for addressing complex issues in KYC and AML. The National Gambling Board regulates online casino platforms, sports betting sites, and the entire gambling industry in South Africa.

There is no fixed time for online gaming providers to conduct KYC processes. More so, they can do those multiple times on a single account. You’ll pass through it even if you open multiple accounts.

Most KYC procedures occur before the first withdrawal. Online gambling sites can allow you to deposit and play real-money games. However, your withdrawal request will remain pending until you verify your identity.

The KYC Processes

Staying compliant is an ongoing process that may never end, provided you still play at an online casino. The processes involve the following:

  1. Customer Identification Programs (CIP)
  2. Customer Due Diligence
  3. Continuous Monitoring

Online gambling platforms must establish clear rules in these segments. You’ll find them in a separate section of the online casino. Alternatively, you can check the terms and conditions.

Like business risks, all customers at online casinos carry specific risk factors. While rendering gambling services, online casinos assign risk profiles to customers.

Customer Identification Program

This is the primary step to ensure compliance on any online gambling platform. It primarily involves identity verification, where the online casino asks for specific documents. You can submit them during registration or before your first withdrawal.

New users must pass this stage to enjoy a frictionless gaming experience. Prominent documents for customer identification in the online gaming industry include the following:

  • Proof of identity: your passport, driver’s license, or other government-issued IDs will suffice
  • Proof of address: This document is mostly through utility bills or bank statements

You can submit these documents through emails or online gambling apps. The online casino will send a notification confirming your verification.

Some customers may need to submit proof of their wealth or source of funds. This process can identify money launderers and those aiming to commit fraud.

Customer Due Diligence

The casino’s compliance team will continue checking on customers. However, the intensity and frequency of these checks depend on the risk rating of each customer. Online casinos often have the following:

  • Simplified Due Diligence (SDD): All accounts begin with simplified due diligence. An online casino will have no reason to intensify its checks if the account makes small deposits. The risk of financial fraud or money laundering is low at this stage.
  • Basic Customer Due Diligence (CDD): This stage kicks in when you cross specific thresholds in deposits or withdrawals. The online casino will request specific documents to verify your identity and non-compliance will result in a blocked account. You may get another risk assessment.
  • Enhanced Due Diligence (EDD): This stage applies more to high-net-worth players. Also, players who are more likely to participate in money laundering will receive enhanced due diligence. These include politically exposed persons, finance experts, company CEOs, etc.

Some federal agencies may ban specific individuals from using online gambling apps or participating in betting activities. Online casinos can only know this through KYC checks.

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When Casinos Initiate KYC

All online casinos must conduct KYC checks on their players. Hence, expect it whenever you register with a new online gambling site. We recommend preparing your documents beforehand to ensure a smooth process.

Besides the mandatory part of KYC, specific triggers can cause online gambling platforms to initiate it. These include the following:

  • Crossing specific thresholds in deposit or withdrawal requests
  • Entering new account information, like a change of name
  • Unusual activities in your account, like potential bonus abuse
  • Occupation change
  • New suspicious behavior, including playing more frequently, depositing large, unusual amounts, etc.

KYC Procedures and Anti-Money Laundering (AML)

AML regulations work in tandem with KYC. Hence, any KYC casino will have guiding AML legislation. The latter prevents terrorism financing and money laundering.

KYC is part of the AML regulation. These checks reveal a player’s intentions, financial power, and tendency to launder money. High-risk individuals are identified and removed from the gambling space if necessary.

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Playing with Full Compliance and Speeding Up Your KYC Process

The best way to speed up your verification process is to prepare. Do the following to speed up the process:

  • Submit clear copies of your documents.
  • Don’t cover any part of the documents.
  • Ensure the dates on your documents are valid, depending on the casino’s requirements.
  • Your proof of address should be less than three months old.
  • Ensure your source of funds shows your name and account details.
  • Ensure your card is signed if you are doing card verification.
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Benefits of the KYC Process

KYC helps safeguard the interests of national economies, online gambling operators, and players. The gambling market consists of licensed and unlicensed platforms. Most gambling operators involved in fraud may not verify KYC on their customers.

Sensitive information collected during this process is kept confidential with enhanced security, providing customers with a safe gaming experience. However, you must ensure you register with licensed online casinos in South Africa.

KYC also helps in preventing identity theft. Sometimes, casinos request real-time photo capture. Those wishing to gamble with your name will fail the verification process.

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Casinos that do not conduct KYC verification are liable for regulatory fines. In extreme cases, the country’s gambling board can close them down for fraud.

Some crypto gambling apps can skip or exclude KYC in their terms of service. They often latch on to the decentralized nature of cryptocurrency. However, we don’t recommend playing on them unless extreme privacy is vital to your gambling adventures.

While over 60% of merchants reported unauthorized access to customer payment details, KYC has kept fatalities low. Hence, we recommend embracing it whenever it pops up in online casinos.

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Frequently Asked Questions about KYC at Casinos

Do online casinos have a choice in implementing KYC regulations?

All licensed gambling apps and websites in South Africa must comply with KYC regulations. This aspect is non-negotiable, with fines attached to defaulting gambling providers.

Can I withdraw without KYC?

Unless the gambling site does not require KYC, you cannot withdraw without verifying your identity. Find out which documents are needed and email the customer support team.

Are there online casinos without KYC?

Yes, there are, but we do not recommend them. Every correctly licensed casino will ask you to verify your identity. There are some crypto casinos that will let you play without, but these are badly or not licensed.

Author: Adiela de Bruyn

Adiela de Bruyn

Adiela de Bruyn, our founder, launched this site in 2016. Since then, she's written over 100 pages filled with crucial info to enhance your gaming experience. Her goal? To provide you with the best, most reliable online casino knowledge.

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Article published 2020/02/01