KYC and AML
These two terms usually get combined as part of the business risk management framework. KYC is a customer verification process which involves document verification or biometrics. AML, on the other hand, encompasses continuous activities a company performs to prevent money laundering and other financial crimes. Both processes are required for safe business conduct involving products or payouts.
As a general rule, the following data is checked:
|First and last name;|
|Date of birth;|
|Source of income;|
Identity checks must be backed up by an official document, for example, a passport, a driving licence, or an identity card. As part of the AML (anti-money laundering) process, customers may also be required to prove that they are not politically exposed persons (PEP) and that they are ultimately beneficial owners (UBO). For iGaming and online casinos, checks must also include self-exclusion registers and age verification to prevent minors from gambling.
KYC and GDPR Procedure
The obligation to collect customer data while at the same time ensuring safe retention and data protection creates a conflict. Government regulations regarding data protection, such as GDPR, create an additional degree of complexity for businesses as they must ensure the implementation of an optimal data protection policy, while at the same time collecting as much information as possible.
Bypassing the System
On average, it costs $1 for a company to perform a manual check of one document. That may not seem like a lot of money, but it is easy to see how an inefficient workflow can lead to high costs. The worst part is that document scanning is definitely not an obstacle for fraudsters. There are a lot of photoshop services that can help to easily create a document scan, even combining it with a real image available online. There is no shortage of options because fraudsters can:
- Obtain original financial and personal documents online;
- Create synthetic identities based on real and fictional user data;
- Provide fake personal information using fake job offers, online fraud, etc.
KYC Process From the Customer's Point of View
Last but not least, customers perceive these checks simply as obstacles. Of course, they can help prevent terrorist financing, but for an average user, checks are an inconvenient barrier that stops them from reaching the service they want to use (or the goods they try to purchase), which results in customers leaving and turning to competitors. Since companies try to cause as little inconvenience to customers as possible, some things have to be compromised. This is a difficult balancing task that is carried out by all companies.
KYC Verification Process – Main Steps
Based on the aforementioned problems, here are the main steps to follow:
|Filter unwanted customers;|
|Obtain valuable user data;|
|Ensure all legal requirements of KYC are met;|
|Check customer ID;|
|Automatically flag fraudsters.|
How to get an accurate overview of users while simultaneously reducing risks? Simply put, users enter only the minimum required information to comply with the KYC procedures, which will allow the company to obtain all the necessary information without compromising players’ casino experience.
Identifying High-Risk Customers
This is another benefit of collecting alternative data prior to the KYC check. You can check which users are worth considering and which seem to be a waste of time. You can use different tools to flag fraudsters, such as social media search, device fingerprinting, and applying filters to differentiate between risky and safe users. In a nutshell, your fraud prevention tools can be a great pre-KYC check solution, which can save you a lot of money and resources required for customer data verification.
3DS Payment Check
After all, it is every company’s choice whether to carry out a 3DS check, you can claim exemption on the condition that you can prove that sufficient customer data has been collected. It is not just a theory, we know that many of our own clients use SEON for customer risk assessment, which removes the need for 3DS. It has a huge positive impact on customer experience. It helps to increase (or at least not to decrease) the number of advertising conversions, reduces the shopping cart abandonment rate, and helps companies take on more transactions without increasing the risk of fraud.
Optimised KYC Process
Since any company operating in your sector must adhere to the same KYC risk assessment requirements, it is important to implement them in a smart way. This process allows you to onboard users as quickly as possible, by means of the so-called simplified KYC process, i.e. completing the simplest user profiles.
However, tracking down individual data points, for example, an email address or a phone number, can help to identify potential risks and level up your fight against money laundering. You do not have to carry out a complete identity check because, for example, the SEON email module can detect the following issues:
- The email address is not aged enough and appears to be illegal;
- Looks like it was created by a robot;
- It has never been linked to a social media profile.
If you have any doubts in relation to a particular user, you can implement advanced KYC checks as part of the sign-up process. It is an automated process that does not slow down your customer at the initial point of interaction (they can go through advanced KYC checks later, for example, when depositing or withdrawing money).
Simplified Verification Process
The KYC and AML compliance process is already moving towards a simplified user experience (using a selfie and ID, uploading utility documents, etc.). It will be interesting to see how this process evolves over time.
Will the KYC process move away from the traditional scan and upload model? Will there be reliable risk assessment methods for verifying ID cards and passports using NPC to predict financial crimes? What about anti-money laundering (AML) prevention checks? It would be difficult to make any forecasts now, however, at present, SEON represents a complete extension that enables you to collect detailed information in addition to the existing requirements.
First and foremost, you can combine fraud prevention opportunities to supplement AML solutions, filter out high-risk users pre-KYC, carry out random 3DS checks, reduce fraudulent transactions, get rid of non-payers, and develop your business safely and with peace of mind.
Know Your Customer Process
The KYC process may vary by company and nature of business but usually includes the following: ID card verification, video verification, document verification, and biometric verification. All casino customers who have requested a payout must go through verification. The request will be approved once all the required documents have been provided. This process may be requested several times, especially when a new deposit method is used. Normally, withdrawals do not get processed if the documents have not been uploaded.
How is KYC verification carried out?
Depending on the method chosen, a person may need to take a selfie or send a photo of the relevant document, which will then be checked by artificial intelligence or a company representative. Documents must be uploaded to your user account in the document section, typically they get approved asap or at the point of payout confirmation.
Does every customer have to go through the KYC verification process?
The obvious answer is “No.” If you filter out unwanted users, high-risk potential customers, and obvious fraudsters, you will save money and resources before you commence the KYC check.
Can I undergo the KYC procedure when playing with Bitcoin cryptocurrency?
You can undergo the KYC procedure when playing with Bitcoin, however, not all operators require it.
What are KYC and AML?
KYC is an identity check. AML is the prevention of money laundering and terrorism financing.
What KYC documents do I need to provide?
The following documents must be provided: ID, proof of address, and payment order. A source of income confirmation may also be required.
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