Jane Jee on AML Compliance: is the gaming sector playing roulette with its profits?

April 2018 Kompli-Global

Over the last year, several gaming companies have been on the receiving end of record fines, following serious failings in the way they tackle financial crime and identify problem gambling.

Last August saw the UK Gambling Commission (UKGC) hand online casino operator 888 a £7.8 million penalty for failing to stop problem gamblers using its services, with one case “so significant that it resulted in criminal activity”. Most recently, we saw a £6.2 million fine handed to William Hill for a “systemic senior management failure to prevent money laundering”, which meant ten customers were allowed to deposit money sourced through criminal activity.

These are not the only gaming companies that have been reprimanded for failure to meet AML regulations and other legislation. If bookmakers and other organisations in the industry fail to up their game now, we can expect to see more such reports in the future.

Know who you’re dealing with

Just like businesses in other sectors, gaming companies are legally obliged to meet the rigorous requirements of AML regulations, especially when it comes to “Know Your Customer” (KYC) checks. This means taking steps to verify customers’ identities and determine whether they have known links to criminal activity.

To achieve this, it is vitally important for companies – whatever their sector – to regularly search for “adverse intelligence” on both new and existing clientele. This means searching the so-called “Deep Web”, as well as traditional and digital news media, international corruption watchlists and other such databases, to find any information that may tie the individual in question to money laundering, either directly or through links to known criminals.

On top of this, companies must also show that they have taken these steps, with detailed audit trails and regular reporting.

Outdated practices

Despite the law, too many companies in the gaming industry are failing to fully search the information available to them to verify their customers’ identities, hindered by outmoded KYC processes that are often slow and ineffective. As a result, companies may well miss vital data about their customers’ connections to financial crime, leaving them vulnerable to lapses in compliance, and the resulting fines.

Performing the necessary due diligence on all the individuals and organisations an operator does business with is an onerous task for any organisation. However, technology has moved on considerably in the last few years, and advanced “regulatory technology” (RegTech) solutions are already available to support gaming companies in making the necessary KYC checks effectively.

Implementing innovative, scalable technology, including artificial intelligence (AI) in particular, can go a long way towards supporting gaming companies in achieving this goal. It can do the heavy lifting in searching for adverse information on customers, helping gaming companies meet rigorous regulatory requirements.

The most advanced of these can perform in-depth searches for adverse information on behalf of human compliance managers quickly and efficiently, automatically applying filters and ranking sources according to reliability in order to minimise the risk of false positives. This is something that cannot be done by outdated manual review, particularly at the scale required in our digital world. Working 24 hours a day, seven days a week, 365 days a year, technology supports these compliance managers, alerting them as soon as adverse information is found, so they can respond quickly and effectively to protect customers and their own brand.

Turning the tables on money launderers

Thanks to the new generation of scalable RegTech, companies in the gaming sector no longer have an excuse not to take every step to meet the requirements of AML regulations.

To protect themselves against censure by regulatory bodies, gaming companies need to up their game and consider fresh solutions to optimise their customer due diligence protocols. The sector has really embraced the use of technology in its customer-facing operations in recent years; failure to do the same in compliance procedures is simply taking an unnecessary gamble, risking reputations and profits, with consequences for future success.