Know Your Customer (KYC)

Learn what online gambling KYC procedures entail, the KYC requirements you must fulfill as a gambler, as well as anti-money laundering measures casinos put in place.

Online casino sites are getting stricter and stricter with who they allow on their site and how much they can gamble for.

This is due to KYC policies that require casinos to do due diligence on their customers to make sure they’re of legal age, not money laundering, and not a problem gambler. Here’s what it means for you:

Know Your Customer (KYC) Explained 

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KYC stands for “Know Your Customer” and is a policy introduced for online casinos as well as other financial institutions. It has been brought in by gambling commissions and enforced through government policy to ensure the safety of the players.

The purpose of KYC is threefold:

  1. Stopping underage gambling. By requiring players to provide a valid ID as well as proof of their address through a bank statement/utility bill the casino operator can stop players under the legal gambling age from playing on their site.
  2. Preventing problem gambling. If a player plays for large amounts of money or starts to dramatically increase the amount of money they play for, the casino will request information on how they fund the account as well as give a survey to see if the person is a problem gambler. If the player cannot provide reasonable information on how they fund their account or if their survey flags them as a problem gambler their account will be suspended/limited.
  3. Preventing money laundering and other crimes. In the past casinos and online betting sites were prime methods for money laundering. However, in order to bet large amounts of money the casino requires players to show proof of income through bank statements which scuppers people looking to launder money.

KYC Requirements for Casino Operators

Governments and gambling regulators have made it a requirement for casino operators to have a KYC procedure in place on their sites. There are two reasons for this: to stop criminal activity and to protect vulnerable groups.

Casinos used to be one of the main targets of money launderers as previously little to no information was required to show up at a casino and gamble for thousands of dollars – and in doing so exchange their illegally obtained money for clean casino money. 

KYC prevents this by requiring proof of funds from a legitimate source if a player gambles for large amounts of money. Another crime KYC can help prevent is fraud as the Address Verification System and Payment Verification ensure that the creator of the account is the owner of the payment method.

The other side to KYC is safety, particularly that of vulnerable groups such as children and problem gamblers. It used to be all too easy for these groups to access gambling, back when online casinos first became a thing. No verification was required and as long as you could find a credit card you could gamble and potentially incur thousands of dollars of debt.

Now betting companies are forced to verify the age of all their players through KYC to ensure that everyone who plays is of legal gambling age. These online casinos will also monitor how much people are gambling and will flag accounts that gamble excessively or start to dramatically increase their gambling. They will ask for income verification to make sure players can afford to gamble and will give surveys to people that test to see if they are or are at risk of becoming problem gamblers. Specialized age verification services exist to solve that process seamlessly for both, players and operators.

KYC Verification Procedures

If you decide to sign up to an online casino, these are the procedures you’ll need to complete before you can play:

Identification Cards

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The first part of KYC that every customer needs to complete is ID verification. This will include at least one form of photographic ID such as a passport, driving license, etc. Ideally, it needs to be a government-issued ID like the ones listed above although some casinos may accept other forms of ID if you do not have a valid driving license or passport.

The ID will have to be currently valid and not expired otherwise it will be rejected. You will need to take a clear photo of the front and back of the ID so that the text is readable.

The purpose of providing ID verification is to make sure you are who you said you were when you signed up to the casino, as well as to make sure you’re of legal gambling age. Signing up to an online casino as another person constitutes fraud and regulated sites have an obligation to ensure that all money they accept is legitimate.

Billing Documents

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The second part that you will need to complete is proof of address. This is will be in the form of an official document that has the same name and address on it that you provided when you signed up to the site such as a utility bill, bank statement, etc. They will not accept regular mail with your address on it, such as circulars, store mail, etc.

Billing documents are required for three reasons: 

  1. It helps with ID verification as the address on the document you provide must match the address you used when you registered with the site. 
  2. The casino can use AVS (Address Verification System) which will cross-check your address with your bank details/card information, ensuring that you’re the owner of the card/account that you plan on funding the account with.
  3. It ensures that you live in a location where the online casino is legally allowed to offer real money gambling.

Payment Information

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The final part of KYC that you may or may not need to complete depending on the casino and the amount you wish to gamble for is payment information. This will often be in the form of two or three consecutive monthly bank statements but they could also request your last two or three payslips. 

Payment information could be requested by a casino for a couple of differing reasons. One reason could be that they need to verify that you can afford to play. This is commonly the reason these documents are requested after a player starts betting large amounts of money.

Another reason could be that they need to verify that the money you’re using to gamble has been obtained legally and that you’re not attempting to launder money. Online casinos are heavily regulated and are under an obligation to ensure that any money they receive from players is both legitimately obtained and won’t cause serious harm to the player if lost.

KYC Verification Procedures for Online Gambling Sites
KYC Verification Procedures for Online Gambling Sites

Community Benefits of KYC Policies

These policies have been brought in by governments for a reason, so what benefits do know-your-customer measures give?

Prevention of Underage Gambling

Whilst gambling is a fun and enjoyable pastime for adults, we can all agree that children should not be exposed to it. As adults, we have the rationality to know that the casino will win in the long run and that gambling is a form of entertainment and not a realistic career choice.

However, children do not have the mental faculties to realize this and can be taken in by the promise of large jackpots. Being exposed to gambling in children’s formative years can lead to gambling addiction in later life.

KYC prevents this by requiring a valid form of ID to be able to play and not allowing people to play if they cannot provide it.

Prevention of Problem Gambling

Problem gamblers are a vulnerable group in society and should have their access to gambling limited as much as possible for their own well-being. The fact that people can gamble online in their own homes for large amounts of money means that these people are at risk if they can access these sites.

KYC helps prevent this by requiring proof of funds for anyone who is gambling a large amount of money or has recently dramatically increased their gambling. As well as this they give out surveys to people who they suspect could be problem gamblers and can limit their accounts based on the results of the survey.

Anti-Money Laundering Measures

Money laundering helps fund criminal activity by turning ill-gotten wealth and money into legitimate capital. Over the years the gambling industry has been a target of groups looking to launder money due to the lax attitudes to large amounts of money being wagered.

In recent times this has changed as regulations have been brought in place by governments and gambling commissions to crack down on money laundering – which is where KYC comes in. If a casino sees suspicious activity on an account they’re obligated to ask for proof of funds to ensure that they’re legitimate. If an account cannot provide legitimate proof of funds it will be shut down and any money in the account will be forfeited.

KYC benefits for online gambling
What are the benefits of KYC and AML measures with online casinos?

KYC Regulations in Different Countries

Different countries will have different laws and regulations surrounding KYC. For more information on your country, check the list below:

US

Online gambling companies based in the US that have over $1 million in gross revenue are classed as Non-Bank Financial Institutions (NBFIs) and must adhere to similar regulations to banks to prevent financial crimes such as fraud and money laundering.

The groups responsible for monitoring and reviewing these companies are the Financial Crimes Enforcement Network (FinCEN) in cooperation with the IRS under the Bank Secrecy Act. There are a variety of regulations these companies must comply with, including accurately identify and verify their players using KYC processes. Failure to do so will result in astronomical fines for the company.

UK

Whilst the US policies are solely based around anti-money laundering measures, the UK has mandated KYC to also prevent underage and problem gambling. Part of the KYC procedure brought in by the Gambling Commission is to establish whether or not a player has self-excluded themselves from gambling by checking their details against a list of people who have opted-in to this program.

In the UK players must complete KYC verification upon opening an account. Other countries around the world may not require these checks until you try to deposit or withdraw to/from the account but the UK insists on it being done as soon as the account is opened.

Macau and China

Whilst gambling is prohibited in mainland China and Hong Kong outside of a couple of state-run lotteries, Macau has a thriving casino industry regulated by the Gaming Inspection and Coordination Bureau. However, this is only for conventional brick and mortar casinos, the picture of online gambling in Macau is much bleaker as all forms of online gambling are considered outlawed.

This means that people who want to gamble online are forced to play on unlicensed, offshore casino sites. These companies are not subject to regulation, making them a risky place to play and therefore do not have KYC policies in place.

Gibraltar

Gibraltar is one of the most popular gambling jurisdictions, alongside another island nation on this list, and is the home of several popular gambling operators. Online casinos that are licensed in Gibraltar can provide services globally as long as online gambling is legal in that location.

The gambling authority of Gibraltar is The Gibraltar Regulatory Authority and is one of the more respected regulatory authorities in the world. This is because gambling regulation within Gibraltar is strict with a variety of compliance requirements for an online casino to operate within its borders, including KYC policies. 

Malta

Malta, along with Gibraltar, is one of the premier locations for an online casino to operate. The Malta Gaming Authority is one of the most respected gambling regulators in the world due to its strict anti-money laundering standards, strong player protection, and secure business environment.

The requirements for getting a Maltese gaming license are some of the strictest around and companies applying for one must go through several independent compliance audits. An online gaming provider with a legitimate Maltese license can be considered a safe place to play. 

Curacao

The island of Curacao is another popular location for online casinos to set up shop but isn’t considered as reputable as Gibraltar or Malta. Companies in Curacao can obtain an all-inclusive gambling license through a simple application and are under the authority of the Curacao Gaming Control Board (GCB).

However, whilst the GCB encourages companies to adopt responsible gambling procedures, these are only recommendations and companies will not face any sanctions for failing to implement these procedures. As it’s much easier to set up a company in Curacao, its license isn’t as reputable as a Maltese gambling license and many European countries have prohibited Curacao-licensed operators from offering games to its citizens.

Costa Rica

Costa Rica is well known for its relaxed attitudes towards gambling laws and therefore is another popular place for bookmakers to operate from. In fact, there is no government body that is responsible for regulating gambling!

There is no such thing as a gambling license in Costa Rica and online casinos can set themselves up using an ordinary business license so there are no checks on the software used or the backgrounds of the operators. The ease with which an online casino can get a license to operate in Costa Rica makes them untrustworthy compared to the more established jurisdictions, and as such, some countries do not allow their residents to play on Costa Rican casinos.

Cyprus

“Gambling” and “betting” are regulated separately in Cyprus, with gambling being considered as wagering on games of chances such as blackjack, roulette, etc. whereas betting being considered as wagering on the outcome of sporting events. In Cyprus, only remote or online betting is allowed and remote gambling is considered illegal.

The regulation requires companies looking to operate within Cyprus to obtain a local license, open an office in Cyprus, and put up capital totaling €500,000. This is the government’s attempt to ensure that only established businesses will enter the market. However, the National Betting Authority of Cyprus does not enforce responsible gambling measures amongst operators and there are no punishments for companies who fail to introduce policies such as KYC.

Know Your Customer: FAQ

We’ve collected and answered the most common questions about KYC:

What are KYC policies among casinos?

KYC or “Know Your Customer” policies are regulations brought into place by governments and gambling commissions to protect the people playing on online casinos. It requires players to provide valid forms of ID and, if they’re gambling a lot, proof of funds. If a player cannot provide this information the casino will not let them play on their site.

Why is KYC mandatory for all players?

Know your customer policies are mandatory for all players because they’ve been brought in by law and casinos risk losing their license if they fail to adhere to the regulations.

How can KYC requirements prevent underage gambling? 

KYC requirements prevent underage gambling by requiring players to provide a valid form of ID and proof of address that matches the information previously given. Using these documents a casino site can verify that a user is over the legal gambling age in their jurisdiction, and restrict access if they’re not.

Why do casinos require proof of address for their KYC policy?

Proof of address is required by casinos so they can use the Address Verification System to cross-check your address with your bank details to verify the ownership of a credit/debit card or a bank account. As well as this it helps to verify your ID and ensures that you’re living in a country where they’re legally allowed to offer real money gambling.

What happens to accounts that fail to go through KYC procedures? 

If a player fails to comply with KYC procedures their account will be suspended with immediate effect, regardless if it is holding any money. To gain access to the account and any money that has been frozen, the customer must follow the KYC procedures.

How is the FinCEN alerted of possible money laundering activities within a casino?

The FinCEN delegates its compliance review to the IRS and if the IRS detects a significant BSA (Bank Secrecy Act) violation from a casino it alerts FinCEN which then launches an investigation into that casino. At this point, FinCEN and the IRS cooperate to detect and gather evidence for BSA violations and take criminal action.

What happens if an online casino fails to enforce its KYC policy?

If a casino fails to enforce its KYC policy it will lose its gambling license and would be unable to legally operate within that jurisdiction. Five UK casinos were at risk of losing their license in 2018 when a regulator found they were not doing enough to prevent criminals from using their sites to launder money.

Can I pass a KYC procedure with a Bitcoin wallet? 

You can pass part of the KYC procedure with a bitcoin wallet, providing the online casino accepts cryptocurrency. Showing your bitcoin wallet will allow you to pass the ‘proof of funds’ section of KYC. However, this is not the case for casinos that only accept fiat currency so always check beforehand.

Whilst it may be a pain for some people to go through, KYC is helping to provide a better, safer environment for people to gamble in.