The global gambling market continues to face mounting pressure to tighten its defences against money laundering and financial crime.
Recent data suggests the problem is bigger than operators anticipate, with annual penalties totalling in excess of $450 million. No wonder regulatory scrutiny has intensified. In its latest annual report, the Gambling Commission revealed that it is stepping up enforcement action against gambling operators found to have breached conditions relating to anti-money laundering (AML), social responsibility controls, and customer interaction.
As a result, operators that fail to comply with the range of AML regulations (including The Proceeds of Crime Act, The Terrorism Act, and The Gambling Act), not only risk significant financial penalties, but lasting reputational damage and, in worst case loss of the gaming license.
Understanding AML gambling rules is a business-critical priority. It’s essential that operators understand their role, the risks of getting it wrong, and the opportunities that best-in-class AML compliance can deliver in terms of simultaneously protecting their revenue and delivering a safe player experience.
The AML risks at play
The gambling sector is highly vulnerable to money laundering and other forms of financial crime, and staying on top of ever more sophisticated criminals is a constant challenge for operators. High-velocity transactions, online player anonymity, and the rapid movement of large sums of money across multiple jurisdictions make the sector a particularly attractive target for nefarious individuals and organised crime gangs alike.
For operators, the risk of AML violations can come from several angles:
- Infiltration by organised crime: Without robust transaction monitoring and Customer Due Diligence (CDD), operators risk unknowingly enabling the movement of criminal proceeds. These risks can be mitigated with Enhanced Due Diligence (EDD) workflows including PEPs, sanctions and adverse media screening, source of funds data, and ongoing monitoring activities.
- Crypto and cross-border transactions: Traditional manual monitoring processes offer weak protection against the emerging risks posed by digital currencies, online wallets, and cross-border gaming. A modern risk-based approach utilising a unified view of KYC and AML intelligence across complex jurisdictions can effectively mitigate these risks.
- Problem and vulnerable players: Without compliant vulnerability checks operators will struggle to tackle the reported an increase in fraud and online scams targeting vulnerable players. The ability to dynamically profile customers in terms of risk and affordability, drawing from a wide range of verified data sources, serves to significantly reduce AML risks whilst limiting friction in the end-to-end player lifecycle experience.
- High stakes players: AML and financial crime is often conducted as a result of high-volume/high stakes play with little player scrutiny. Real-time affordability and source-of-funds checks, supported by public, third-party and self-declared data indicators, provide risk mitigation without disrupting the player experience.
How money laundering happens in gambling
To give a brief overview. Money laundering activities in gambling typically follow three stages:
1. Placement: Criminals introduce illicit funds into the gambling system, often through cash deposits, chip purchases, or online account top-ups.
2. Layering: They attempt to disguise the money’s origin via repeated bets, chip dumping between accounts, or minimal play followed by withdrawal.
3. Integration: Finally, laundered funds are withdrawn as “winnings” or transferred to external accounts, completing the cycle.
Each stage requires a proactive approach, supported by AML screening tools designed and integrated seamlessly into the player experience to reduce the risk of financial crime at every stage of the end-to-end gaming lifecycle.
Operators should ask themselves if they’re following the AML gambling rules:
- Has an AML risk assessment been conducted in the last 12 months?
- Do current CDD and affordability checks capture all relevant risk indicators?
- Is continuous monitoring in place to spot suspicious activity in real time?
- Is adequate PEP and sanctions screening undertaken?
If the answer to any of these questions raise concerns, now’s the time for gambling operators to act. So, let’s explore at what a best practice approach should look like…
Building a best practice approach to AML compliance in gambling
To meet regulatory compliance obligations, protect players, and deliver a seamless experience a modern best-practice approach to AML compliance should include:
Streamlined technology stack
Unified AML screening though a single API access point. KYC, IDV, AML and fraud screening seamlessly integrated to help operators remain compliant, avoid fines and suspensions, offer efficient onboarding of new players, and enhanced player safety.
Data-driven frictionless compliance
Data orchestration is a gamechanger for gambling operator AML compliance. The ability to dynamically profile customers in terms of risk and affordability, drawing from verified data sources, serves to significantly enhance player lifecycle management.
CCJs, IVA, bankruptcy, debt and credit data, income and affordability verification, plus a range of vulnerability and risk indicators, combined and matched from a wide range of data assets from multiple sources builds a single customer view and clear picture of risk with minimal impact on player experience.
Intelligent automation
A single view of risk and affordability whilst eliminating redundancy and human error, reducing regulatory exposure, mitigating financial crime exposure and removing friction from every stage of the player lifecycle.
Take Novibet for example. Novibet strikes the perfect balance between compliance and customer engagement via a suite of AML solutions delivering the bookmaker with access to non-intrusive identity affordability and vulnerability checks, as well as global sanctions, PEPs and watch list data from key jurisdiction across South America, North America, and the EU through a single API access point.
Screening millions of records per month prevents money laundering at initial player onboarding stage, though ongoing monitoring, and at point of transaction to deliver a swift journey for its ever-going player base, whilst protecting its revenues and reputation.
Introducing nCino Identity Solutions
Recently launched, nCino Identity Solutions helps operators unify risk data, automate KYC, AML, and affordability checks, and maintain continuous oversight across the entire player lifecycle.
By taking a proactive, technology-led approach to AML compliance, gambling operators can stay ahead of evolving regulations, protect their reputation, reduce exposure to regulatory scrutiny and penalties, and most importantly delivering a safe and frictionless player experience.
See out best-in-class intelligent solutions for gambling operators in action, request your free demo today.
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