In an industry where risk and fraud are seen as an inevitable (and not always necessary) extra headache, the new regulations set forth by the MGA and the FIAU in complying with the 4th Anti Money Laundering Directive are poised to further complicate operations.
It is not exactly a secret that especially smaller operators have historically tended, to a certain degree, to overlook or minimize the importance due to compliance and player KYC, with a counter-intuitive, laissez-faire attitude wherein only the base required information was collected, factoring in eventual player risk as a cost of doing business, invariably assuming that the approach is in fact cheaper than setting up the infrastructure and resources to be fully compliant with legal requirements.
With the issuing and eventual fine-tuning (read as further restricting) of the proposed 2017 regulatory framework, this approach can be no longer.
Operators are now obliged to undertake a fully risk-based approach to customer due diligence, with a specific focus on the identification of origin of funds and the factoring in of risk posed by players within specific products and channels.
Upon acceptance of new registrants, gaming operators are required to instantly ascertain player identity via the collection of client name, address, location and date of birth, nationality and identification documents together with a self declaration on politically exposed status and active, verified sanction list screening.
Based on factors such as jurisdiction of residence, age, product channel and geographic origin and destination of funds, operators are to differentiate between whether standard due diligence applies or if customers are required to undergo extended vetting, requiring, amongst others, extended identity and residence verifications and face-to-face interviews.
Additionally, upon hitting the threshold of a paltry €2000 in deposits, players are automatically required to undergo extended due diligence checks (or in the case of higher risk transactions or payment methods, the ceiling is set to a tiny €150), where the onus is on the operator to physically segregate account totals into deposit amounts and winning balances and to not allow any activity to proceed on the players’ accounts prior to successful completion of the due diligence required.
This effectively means that the existing practice wherein players would be vetted only upon a request to withdraw can no longer continue and disregarding of the regulations is simply not an option.
However draconian the approach might appear, especially to medium-sized and smaller gaming outfits which are to date nowhere near compliant with either the 4AMLD or the even more stringent rules proposed by the MGA and the FIAU, the new framework is a reality that needs to be dealt with.
The most obvious impact of complying is an exponential increase in administrative overheads, not least the cost of significantly ramping up investment is specialist resources, training and internal infrastructure setups. In reality, as witnessed all-too-often in other industries (primarily Banking and FinServ) where the impact of more rigourous KYC has been in place for longer, no amount of additional increase in specialist resources can ever correctly or fully address the regulatory requirements, or indeed feasibly so.
The only way forward is automating the processes required, minimizing the dependence on human bias, limitations and therefore increasing overall efficiency while minimizing cost increases.
KYC Portal is the ONLY solution on the market that provides full compliance with the MGA/FIAU 2017 regulations straight out of the box - providing a platform through which the data fields, mandated documents, risk factors and face-to-face interviewing are preset, ready for integration with existing infrastructure allowing the gaming industry, regardless of an operator’s size to hit the ground running and be fully compliant in as little as two weeks from initial install.
KYCP takes out the guesswork and fragmented task delegation out of the due diligence and compliance process, through a prebuilt risk assessment framework, allowing for all required entity types, associated mandated documentation, data fields, interview questionnaires and required process checklists.
Through a highly visual interface which automatically recommends applications for approval or rejection, KYC Portal generates uniform risk ratings based on an operator’s specific risk appetite while removing human bias and the exclusive dependence on specialist risk and fraud teams.
Moreover, through KYC Portal, sanction list and PEP screening as well as document validity verification are fully automated processes with integration via web services with 3rd party providers of the operator’s choice, with recursive checking carried out at least once daily across all existing player accounts.
Ongoing monitoring of player data, document lifespan validity and optionally, monitoring of transactions identifying suspicious activity before fraud can impact operations are equally carried out automatically, requiring zero human intervention until otherwise notified by pre-set triggers, effectively freeing up specialist resources to focus on operations of actual importance, rather than diluting the teams’ effectiveness across all existing accounts in an attempt to not fall foul of the law.
Additionally, KYC Portal offer a world first with its proprietary, embedded face-to-face interview functionality, through which players, regardless of geographic location are assessed for extended due diligence, with video recording being fully embedded in the system, disallowing any tampering, editing or even simple pausing of the interview, assuring operators, subjects and regulators alike of the validity of the resulting interview.
Additional unique features also include embedded facial recognition technology, wherein subjects undergoing extended due diligence get further assessed by comparing identification document photographs supplied with the video interview recordings to fully ascertain identity of the player beyond any doubt.
KYC Portal also comes complete with preset, automated FIAU report and STR templates, through which, upon request by the regulator or in the case of suspicious transactions requiring escalation and reporting, at the click of a button, full compliant reports are extracted, complete with all relevant history and information as required at law with, once again, zero overhead in terms of specialist resources.
Best of all? The investment required in KYC Portal is substantially less than what one may imagine, with pricing for the enterprise version starting at a one-time fee of €18,000 and an ongoing annual licence of €2,000 – less than half the wage cost of a single fraud team member.