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Know Your Customer explained

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Checked by Paul P.

In the world of online casino and sports betting activity in the US, the Know Your Customer (KYC) process is like a superhero shield against cheats and bad actors.

We’re going to explain all you need to know about KYC, why it’s so crucial, what makes it kick in for existing users, and how it’s different from Anti-Money Laundering (AML).

We’ll also share practical tips to help you speed up the KYC process for a smoother gaming experience.

What is KYC and why is it so important?

Know Your Customer is a process that gambling websites in the USA implement to verify the identity of their users. It’s like a digital ID check for online platforms, ensuring everyone playing by the rules.

Every financial institution in the US, be it a bank, credit union, wealth management firm, broker-dealer, finance tech app (like Paysafecard), lender, etc, has to have KYC procedures in place.

KYC has its origins in the Bank Secrecy Act, enacted in 1970, which initially targeted banks to prevent illicit activity. Its scope has expanded rapidly to include casinos with annual revenue exceeding $1 million.

The U.S. Financial Crimes Enforcement Network (FinCEN) requires both customers and financial institutions to comply with KYC. It’s the responsibility of each operator to implement the rules and regulations set at a federal level.

Know Your Customer is now a crucial aspect of all casino and sportsbook customer due diligence aimed at preventing fraud, underage gambling, and identity theft.

The KYC process explained

The KYC process typically consists of three key components:

  1. Customer Identification Program (CIP)
  2. Customer Due Diligence (CDD)
  3. Continuous Monitoring

1. CIP – providing your ID

The first point of call in any casino or sportsbook KYC process is to check if you are really who you say you are.

They are looking for two main things: genuine proof of your identity and your address.

You will typically be asked to provide a passport or driver’s license to prove your identity.

To prove your address during a KYC request, the usual go-tos are a bank statement or a utility bill with your name on it, and it should be dated within the last three months.

If the documents provided match the details you have provided, then you should clear this stage without any issues.

2. CDD – three levels of checks

CDD relates to running checks on you and your transactions to assess the risk you pose to both the gambling business and yourself.

There are three levels to this which dictate the level of monitoring your gambling account will receive.

  • A simplified level of due diligence is automatically performed on every new gambling account.
  • A higher level of due diligence kicks in when you reach a pre-determined deposit or withdrawal threshold set by the platform provider. Your account will be automatically locked until you provide the requested documents and have proven you are who you claim to be.
  • Enhanced due diligence will be applied to accounts that are deemed to be high-risk. This could be triggered by your occupation (politician, broker, etc) or by gambling with large sums. You will be asked for further information relating to the source of your funds.

3. Continious monitoring

This simply means that your account, and everyone else’s, is continually monitored by the platform provider. The flagging of any suspicious account activity, for example, a sudden deposit much larger than is typical, will result in further investigation.

Your gambling account could be locked or suspended with your funds frozen until the matter is resolved. A report may be sent to the local authorities for further investigation.

Triggers for KYC checks on existing customers

Numerous factors could trigger KYC checks on you as an existing customer at any online casino or sportsbook. These may include:

  • Withdrawal thresholds: reaching a pre-determined withdrawal limit may prompt additional verification.
  • Account activity patterns: unusual or high-risk betting behavior may trigger a KYC review.
  • Account updates: any changes to personal details or payment information often prompt a re-evaluation.
  • Random audits: periodic checks may be conducted to ensure ongoing compliance with gambling regulations.

What’s the difference between KYC and AML?

Think of KYC and Anti-Money Laundering (AML) like the dynamic duo of financial rules. Working with each other to keep players and online gambling businesses safe.

Put simply, KYC checks make sure you are who you say you are by gathering your info, preventing fraud, and keeping things legit across different industries.

On the other hand, AML is a money-crime fighter, keeping a close eye on transactions, reporting anything shady to the authorities, and putting a stop to dirty money.

So, KYC sets the stage, making sure everyone is legitimate, while AML is the superhero actively fighting financial crime.

How to speed up the KYC process

The KYC process can be frustrating as a gambler when you just want to start placing bets or spinning slots.

However, there are a few things that will help you to navigate any KYC checks with minimum fuss. Here are our top tips:

ID and a mobile screen showing matching info

Provide matching information

The details you provide during sign-up must match the information on the documentation you provide. A typical cause for delay can be signing up using your nickname when your official documents show your birth name, i.e. Dan vs Daniel.

Be sure to use any middle names if they also show on your driver’s license, passport, etc.

ID and a document with a green tick

Submit legible documents and images

When providing proof of ID, show the whole document without covering anything or tinkering with the picture/scan. Images, screenshots, and text need to be completely legible and all four corners will need to be completely visible.

ID with a magnifying glass

Always check validity

Make sure the document you are providing is still valid and dated within the time frame stipulated. This is usually no older than three months. Expired or outdated submissions won’t cut it for operators.

Speech bubble and a clock

Be prompt to respond

Respond as soon as you can to any questions or requests for further information and documentation. Regularly check emails, messages, or the website for KYC-related communications to avoid any delays due to missed notifications.

The longer you take to respond to messages from the provider, the longer the whole process will take. There’s also a risk that dragging out the KYC checks could make your documents invalid if they slip past the stipulated dates/deadlines.

Wallet, coins and a green tick

Stick with verified payment methods

Once you have given the provider proof of your chosen payment method and had it verified, it’s best to stick with it.

Frequently changing the way you fund your account or make withdrawals may flag you as suspicious and cause further delays in the KYC process.

How safe is the KYC process?

The KYC process can feel intrusive as a player when you are being asked for a lot of personal and financial information. It’s natural to worry about the risks that come with giving up so much private information such as identity theft or data leaks.

Online casino and sports betting platforms, like BetMGM, prioritize user security by employing industry-standard encryption technologies like HTTPS, SSL, and end-to-end encryption, safeguarding sensitive data throughout its journey. BetMGM has taken things further in the payment department, too.

PCI (Payment Card Industry)-validated point-to-point encryption is also commonly employed, meaning that actual cardholder data never enters any platform’s system.

Sources

  1. https://www.occ.treas.gov/topics/supervision-and-examination/bsa/
  2. https://www.fincen.gov
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