International edition
September 20, 2021

By Ron Mendelson, Fast Offshore Founding Partner

The lowdown on AML, KYC, and Responsible Gaming

The lowdown on AML, KYC, and Responsible Gaming
AML, KYC, and responsible gaming are key pillars of the online gambling industry, Ron Mendelson says.
Costa Rica | 03/08/2021

In his latest column for Yogonet, the expert on the igaming industry provides essential insights to have a better understanding of Anti-Money Laundering, Know Your Customer and Responsible Gaming. He also offers answers regarding their mandatory condition and compliance around them.

Ron Mendelson is the Director of Costa-Rica based International Business & Corporate Services consultancy firm, Fast Offshore. With ... (+ Info)


ML, KYC, and Responsible Gaming might sound like hard work, but it's a legal necessity when running an iGaming company. Here you can get the lowdown on the what, why, and how.

In recent years, the online gambling industry has gone from strength to strength. There is increased demand for quality gambling sites, and more and more platforms springing up left, right, and center. But amid this is a global effort to crack down on financial crime and ensure businesses are doing their bit to detect and prevent it.

If you are starting an online gambling business, or are considering it, you’ve likely heard about AML, KYC, and Responsible Gaming- but what are they? Are they mandatory? How do you go about being compliant?

What’s AML? 

Anti-Money Laundering, or AML, refers to a set of regulations, laws, and processes designed to prevent criminals from concealing and cleaning the proceeds of crime. 

Money obtained from criminal activity such as drug cultivation and trafficking, corruption, human trafficking, and illegal weapons trading, often needs to be “cleaned” before it can be used for other purposes. By cleaning, we mean that its illicit source is concealed, so it appears to have come from a legitimate activity and can be used without drawing attention from the authorities.

AML laws are there to regulate certain industries considered to be at risk from money laundering. They lay down a set of instructions and rules that companies must implement to prevent them from being used in this way. Typically, AML processes apply to banks, financial institutions, online gambling sites, forex and crypto exchanges, trading platforms, and third-party payment providers.

These rules are created at a national level, often in conjunction with regulatory bodies that oversee the at-risk sectors. AML regulations are updated periodically to ensure they are up to date with evolving threats and how criminals try to circumnavigate the system. 

What’s KYC?

Know Your Customer, or KYC refers to guidelines that require at-risk businesses to verify the identity of a customer before engaging in a professional relationship. As well as confirming they are who they say they are, the aim is to identify any potential risks at the onboarding stage and to assess their suitability as a client.

KYC forms a part of AML policies and is defined and monitored by financial conduct authorities and specialist regulatory bodies.

This information, otherwise known as Due Diligence, can include but it’s not limited to:

  • Government-issued passports
  • Proof of address
  • Bank and professional references
  • Photographs
  • Bank statements
  • Details on the source of funds

These documents must be recent and certified, to be accepted. Typically, these documents are held on file until new ones are requested, as per AML and KYC policies.

KYC applies to businesses in the financial sector, online gambling sites, crypto and blockchain businesses, corporate and legal service providers, exchanges, and trading platforms, and sometimes even when purchasing large ticket items. It doesn’t matter how big or small the company is, if the activities fall under the scope of KYC and AML, they have to be considered.

What’s responsible gaming?

Responsible Gaming is a set of social responsibilities that you have, as an operator, towards your clients. Often, these rules are laid down by licensing authorities, national law, and in various codes by industry bodies and organizations.

The aim is to ensure that fairness and integrity are integral to all online gambling activity. Also, operators must assist those who are or may be, dealing with gambling addiction. 

To address gambling addiction, online operators can use tools such as time limits, reality check popups, self-exclusion, deposit limits, account trackers, and even permanent account closure. Some of these are enforced by law and licensing conditions, depending on the jurisdiction. 

Operators must also work to prevent underage individuals from using their products by thoroughly reviewing their ID's. When it comes to marketing and advertising products, anything that targets youngsters or advertising at certain times or places is considered a violation of responsible gaming measures. Additionally, all marketing must be ethical and must not promise wealth, success, or seek to glamourize gambling.

Another aspect of responsible gaming is operators ensuring that all their gaming products are regularly tested to ensure they are fair, random, and follow the rules of the game. Customers should also get paid promptly and accurately and in line with the formal processes laid down by law.

Other aspects of responsible gaming include guaranteeing customer data privacy, providing a safe and secure operating environment, providing adequate customer service, and proactively dealing with criminal behavior.

Is it optional?

No, it’s not optional. AML, KYC, and responsible gaming are key pillars of the online gambling industry. Failure to integrate and implement these processes can have severe consequences for operators. 

Firstly, they will face an investigation by the relevant authorities. This investigation can lead to suspension or revocation of your gaming license, getting banned for operating similar businesses, and severe financial penalties. Some cases can even result in criminal charges and sentencing. 

Your company will be blacklisted, and your name, should you try to start another business, will be tarnished. Simply put, while these matters may be a headache, not implementing them is even more so.

How do I get compliant?

Getting compliant can take a lot of work, but thankfully much of it has been done for you. Working together and considering the jurisdiction and nature of the business, your corporate service provider can help you tailor it and roll it out. Additionally, they can help you conduct audits and reviews, ensuring you remain in line with all applicable rules and regulations.

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