Betting on Technology to Keep Pace With AML Compliance Requirements

Betting on technology to keep pace with AML compliance requirements

Diversification in gambling offerings, and more specifically, the growth in online gambling and the emergence of stricter regulatory requirements calls for smarter technologies to make gambling operators’ anti-money laundering (AML) compliance/patron due diligence processes more efficient. Greater proficiency in AML screening not only helps these operators better manage their risk, but also helps them stay more competitive relative to their peers in the industry.

Gambling Industry Growth Outlook

According to, the casino industry (including both online and offline plays) is expected to reach a value of $635 billion by 2022. Although land-based casinos currently comprise the majority of the gambling industry’s overall revenue, the online gambling segment is expected to increase at a much faster rate than its offline counterpart. Online gambling revenue is forecasted to grow at almost 11 percent compound annual growth rate over the next several years, and the European market will contribute to a significant part of that growth, with revenue predicted to reach $4 billion in the U.K. alone.1

Previously, legal online gambling in the U.S. was wishful thinking. But in 2018, the U.S. Supreme Court’s decision to legalize sports betting2 made it a reality, with its popularity spreading across the nation. According to the Online Poker Report,  with momentum growing, states with legal online gambling could be the norm and not the exception in the not-too-distant future. To date, four states have legalized online casino and/or online poker, six states have authorized online lottery and online sports betting is in the works in at least two states. In addition, daily fantasy sports have been legalized in no fewer than 19 states, although the debate continues over whether or not this is considered “gambling.”3

Online Gambling Is Far From New

Online gambling has actually been around for some time, with the first online casinos opening in the 1990s, when the internet was in its infancy. However, popularity significantly increased in the mid-2000s with the advent of mobile technology. Mobile phones and tablets now allow online gamblers to play games wherever they may be, whenever they want. For example, the growth of the online gambling market is being fueled by the rise of gambling apps and social gambling.

Online Gambling Growth Presents New Challenges For Gambling Operators

Online gambling presents a completely different experience for players than offline gambling, and operators need to be able to accommodate their virtual players in the same manner as their offline patrons. As the internet is by definition, the worldwide web, gambling operators are responsible for restricting player access across borders, as well as to anyone who is underage or on a self-exclusion list, or who has been recognized to be of criminal intent. Further, with the expansion of sports gaming, those who are underage or self-excluded are under increased scrutiny, given that it is more and more difficult to properly identify them online.

For example, U.K.-based 32Red was recently fined 2 million pounds for encouraging a problem gambler by offering free bonuses. According to Sky News,  the Gambling Commission investigated the casino’s online dealings with a customer who was allowed to deposit 758,000 pounds between November 2014 and April 2017 without being subject to proper controls. The Commission stated that there were at least 22 incidents that indicated the patron was a problem gambler. According to Gambling Commission Executive Director Richard Watson, “Operators must take action when they spot signs of problem gambling and should be carefully reviewing all the customers they are having a high level of contact with.”4

Whether it be in Europe or the U.S., the various types of online games, as well as the countries, states and cities they originate from, all have their own unique regulatory requirements. Further, these requirements are frequently in a state of flux, so compliance is always a concern.

Incorporating KYC and AML Regulatory Compliance Into Your Everyday Operations

Although all these separate gambling regulations exist, one thing they all have in common is rigorous know your customer (KYC) requirements. However, gambling operators face a balancing act of conducting a thorough KYC check in the most efficient manner while minimizing the hassle for their players so as to not jeopardize the customer experience and revenue opportunities. In addition, with more captured player data comes more responsibility. With recent emphasis on an evidence-driven, risk-based approach, gambling operators also need to be able to demonstrate the rationale behind their decision making. Therefore, having the right technology helps automate the process of capturing player data across every touchpoint in their operations and consolidating the data to gain a complete picture of a player. The automated process should also include the ability to document every action taken during customer due diligence (CDD).

Unfortunately, the reality for many casinos is that they have limited compliance staff to deal with the massive number of people coming through their doors. This has forced many of them to decide that they have the capacity to screen only the highest-risk players, which sometimes equates to about only 1 percent of the people gambling. On the flip side, some operators have recognized the benefits of technology in risk-proofing their organizations. For example, some casinos now use cameras for surveillance versus relying on their dealers or pit bosses, and they now monitor their patrons’ transactions and validate their identification using advanced technologies. By leveraging technology, they can efficiently monitor all of their patrons—as opposed to the select few, seemingly highest-risk individuals—without undermining the customer experience.

Both online and offline gambling operators depend on efficient and accurate onboarding of their players to help mitigate risk and ensure compliance with domestic and international AML regulations

Both online and offline gambling operators depend on efficient and accurate onboarding of their players to help mitigate risk and ensure compliance with domestic and international AML regulations, such as those of the Bank Secrecy Act (BSA), the Office of Foreign Assets Control (OFAC) and the Fourth AML Directive (4AMLD). The 4AMLD requires gambling services to apply an evidence-driven, risk-based approach to their CDD process. The American Gaming Association’s (AGA) 2017 updated AML Best Practices recommends that casinos follow a risk-based approach to identify illicit behaviors and safeguard the integrity of their operations.

Generally speaking, regulations have been expanding or broadening the circumstances under which CDD or enhanced due diligence (EDD) measures will be required. As a result, offline and online gambling operators, which are obliged to prevent money laundering and terrorist financing, need to adopt more sophisticated processes and controls when conducting CDD and monitoring the financial transactions of their players.

How Automated AML Compliance Screening Can Help

As a result of the industry’s recent growth and stricter regulatory standards, the CDD process is expected to become more time-consuming. Both online and offline gambling operators worldwide will benefit from re-evaluating and streamlining their existing processes around AML screening of their players and guests to help them improve operational efficiency and reduce exposure to AML risk. This will include adopting a more efficient way to capture and validate players’ identities to help facilitate their own risk-based approach. Further, their processes and technology should allow them to share the captured information across their organization to achieve consistent compliance across their operation. Some of the components of an efficient process include:

  • ID validation for KYC checks – Automated ID validation makes for more efficient player onboarding and compliance checks, and provides more accurate player information for reduced risk of reputational damage or fines. Identity documentation such as a driver’s license, national ID card or passport can be scanned onsite using a high-resolution scanner or remotely using a patron’s smartphone. After validating the authenticity of the ID, the data captured from the ID can be screened against sanctions, politically exposed persons (PEPs), exclusion lists or any internal blacklists.
  • Sanctions list screening – The best practice is to screen players against government-provided sanctions lists of individuals and entities with whom gambling operators may not engage in financial transactions. Any exclusion list or internal blacklist should also be added to the regular screening process. Automated technology enables maximum precision and efficiency in list screening by continuously monitoring list sources for additions and revisions and promptly updating lists with the latest changes. Especially important for accurate screening is pre-processing data by parsing, standardizing and reformatting before matching, as well as utilizing a granular matching algorithm to enable your risk-based approach. This results in significantly fewer false positives as well as a reduction in required review and investigation resources.
  • Transaction monitoring – Automatic screening of incoming wires and requests for credit reduces risk, typically without interrupting the transaction. It is important to have the capability to customize monitoring rules based on risk categories across patrons. With configurable monitoring rules and thresholds, seamless compliance processes can be built to prevent and address risk according to the operator’s specific risk appetite and business situation.
  • Consolidated archives for record keeping – All customer-related compliance information including compliance history, reports, audit trails, background research and identity information should be securely maintained in a central archive for easy search and retrieval and to meet record-keeping requirements. For those who operate multiple platforms, whether online or offline, it is even more important to get an omni-channel, integrated view of their patron, for instance, across the cashier’s cage, players club database and/or resort operations. As gambling operators launch new products and add more complex offerings, getting a full picture of their patrons’ activities becomes more difficult, and utilizing automated technology will help them gain a holistic view of their risk. For example, when conducting EDD, having all the information readily accessible in one place expedites the investigation workflow, and provides automated documentation and the audit trail needed for auditors and regulators.
  • Integration with internal systems and third-party databases – By integrating their compliance process with their internal systems and workflows, gambling operators can conduct compliance checks from any entry point. Further, seamless integration with third-party databases such as an investigations and public records databases, allows operators to easily gain a consolidated view of a player’s identity and activities with all information being in one central location. This is helpful particularly when EDD is required, enabling more accurate and faster investigations.
  • Consistent corporate-wide policies and controls – Gambling operators need to apply consistent corporate-wide procedures and controls and monitor risk on a global basis while incorporating specific local needs. Larger operators should especially consider adopting a centralized approach with certain compliance functions being decentralized. This essentially allows them to enjoy the best of both worlds by creating a hybrid compliance program that provides a centralized view and control while still giving them the opportunity to leverage local and business unit-level knowledge about their guests.


As more gambling operators look to expand to innovative offerings, including leveraging the popularity of online gambling, mobile devices and social gaming, the challenges for these operators to fully authenticate the identity of their players and monitor their activities will continue to grow. Faced with mounting and more complex regulatory requirements, both online and offline gambling operators are increasingly using technology to effectively and efficiently screen players and truly know their customers.

Joel Borsch, vice president, North America, Innovative Systems, Inc. and FinScan, Pittsburgh, PA, USA,

Craig Robertson, managing director, UK, MEA, and APAC, Innovative Systems, Inc. and FinScan, London, U.K.,

  1. “Global Gambling Industry: State of Play in 2018,”,
  2. Murphy v. National Collegiate Athletic Association, No. 16-476.
  3. Steve Ruddock, “The Landscape for US Online Gambling Is Looking Good For 2019,” Online Poker Report , June 18, 2018,
  4. “32Red fined £2m for encouraging problem gambler with free bonuses,” Sky News, June 20, 2018,

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