What is KYC and How Does It Work?
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What is KYC and How Does It Work?

What is KYC and How Does It Work?

You may have heard the term KYC in the world of online casinos, but, what do those 3 letters mean? KYC is short for, ‘Know Your Customer’. While it sounds friendly, it's much more about the business of protecting online customers.

In May 2019, the UK Gambling Commission announced that all casinos operating under a UK license must verify their players’ identities using “Know Your Customer” procedures. This means every new player who registers must provide information verifying their age and identity. This involves sending copies of certain personal documents, such as:

  • Proof of age: driving licence/ passport/ national ID card
  • Proof of address: a utility bill or bank statement less than three months old
  • Proof of payment method: a copy of a debit or credit card or a screenshot of an e-wallet account

The reason for this is to help prevent identity theft, fraud, and money laundering. Also, it is to verify that the player is of legal age to gamble. KYC procedures help to protect both the casino and players from potential criminal behaviour.


Why is the KYC procedure important?

You might be wondering why this seemingly intrusive procedure is necessary. There are several very good reasons why online casinos implement KYC as a precautionary measure.

To prevent underage gambling

In the United Kingdom, underage gambling has become a serious concern. One study conducted by the UK Gambling Commission revealed that 39% of 11-16-year-olds had gambled their own money. Another 6% had wagered online using their parents’ gambling account.

Another study conducted by the BBC found that the number of adolescents with a gambling problem has quadrupled between 2016 and 2018, to around 50,000.

To maintain their license, online casinos must take steps to prevent underage gambling.

Fraud prevention

Fraud can be perpetrated using online gambling in many ways. Online activity is anonymous, making fraud detection more difficult. The most common types of fraud include:

Identity theft – Illicitly obtained credit card details can be used to fund a personal account. Identity thieves can even register an account under someone's stolen identity, and use that to gamble, or to launder money.

Multiple accounts – Some people try to create more than one account at the same online casino. This is done to manipulate a game by playing against themselves or to claim multiple bonuses. For example, if someone creates several fake accounts and some of them take seats in a poker game. That user is playing against themselves, for the most part, and is almost guaranteed to win.

Money laundering

Gambling is a traditional way for criminals to launder money. Typically, illegally obtained money is played to cash out legitimately. Thus, the criminals avoid being traced by the authorities.


How Common is Fraud and Money Laundering in Casinos?

In 2018, the UKGC issued warnings to five online casinos that they were at risk of losing their licenses if they didn't do more to stop criminal activity.

Overall, The UKGC sent letters to 17 online casinos, on the controls in place to prevent money laundering, fraud, and even terrorist financing.

The fact is, gambling has been a way to hide the proceeds of crime for centuries. It's no secret that for decades, the Italian Mafia ran Las Vegas. Sure, the mob wanted to make a profit from gambling. But also, millions of dollars made from illegal activities were undoubtedly laundered through the casinos. The same could be said of gambling establishments in every country around the world.

Another example of large-scale money laundering through casinos occurred a few years ago in Canada; the “Vancouver-model” of money laundering was linked to China. It came to light that the casinos in Vancouver had been unknowingly used to launder $100 million over a decade.

The scheme involved wealthy Chinese citizens circumventing China’s strict currency controls.

Before they traveled to Canada for a “gambling holiday”, they would arrange to have cash, made from illegal activities, delivered to them in Vancouver. They would then trade cash for casino chips. The winnings would then come out as “clean cash.”

There are three stages in a typical money laundering operation:

  1. The illegal proceeds, such as cash made from drug deals, are put into the financial system.
  2. The source of the cash is obscured by building up layers of different transactions to make it untraceable.
  3. Once sufficiently obscure, the laundered money goes back into the legitimate financial system.

As you can see, casinos are an ideal vehicle to launder money.


Online Casinos, Identity Theft, and Bot Money Laundering

Cybercriminals have sometimes used bots to launder money through online casinos. For example, sometimes they launder money by using sophisticated bots to help rake in chips in online poker rooms. Both players and their criminal handlers take seats at a poker table, thus, rigging the game.

Phishers also use stolen credit cards to set up online gambling accounts using the victim's identity. They then launder the stolen money by playing games against other gang members. 

Chip dumping is another method in which illicit money is deposited into fake customer accounts. That money is then deliberately lost at table games to other gang members. The money is ultimately cashed out into various bank accounts, thus, obscuring the money trail.

Those are just a few of the ways that criminals can launder money through a legitimate online casino. But, that's not to say criminals also don't run online casinos; a few years ago, members of the notorious Genovese crime family were busted for operating illegal sports betting websites, as well as loan sharking and bootlegging. In another case, Eugene “Boopsie” Castelle of the Lucchese crime family  also ran an illegal sports betting site. The Lucchese operation raked in $13 million before it was shut down. The Italian Mafia may not run Vegas anymore, but they're still bookmaking and running casinos online.


KYC Can Help Prevent Gambling Addiction

When a player chooses to self-exclude from gambling at a casino, KYC procedures can flag it if they try to sign up under a new identity. Also, KYC can potentially flag a problem gambler attempting to use someone else's credit card.

Gambling addiction is a growing problem in the UK, and it is the casino's social responsibility to help. According to a survey conducted by GambleAware, close to 1.4 million in Britain are problem gamblers. Overall, research indicates that 5 million people in Britain have been harmed, due to their own, or someone else's gambling.

All licensed gambling companies must participate in a multiple-operator self-exclusion scheme. This means that a player can make one request to self-exclude from all websites offering the same category of gambling. Thus, a KYC investigation could uncover and flag a self-exclusion to any new websites the person may try to join.

All licensed online gambling sites are required to join GAMSTOP, a multi-operator self-exclusion scheme. That means all UK licensed and regulated gambling sites are connected through GAMSTOP.

In addition to KYC procedures, casinos licensed by the UKGC must also provide safe gambling resources. 


Getting Started with KYC Online

As you can see, the “Know Your Customer” procedures instituted by legitimate, licensed online casinos serve a purpose. While it can seem invasive and annoying, ultimately, it will help protect you, the casino, and other players from crime.

The procedure is relatively simple. You'll need to use your cellphone or another digital camera, and have the necessary documents on hand. Pay attention to the required formats and sizes for the uploads. (For example, send the documents like JPG, PNG, BMP, PDF, or DOC). Also, make sure that your documents are up to date and the photos are clear.

Once you're ready, these are the next steps:

  • Take a clear photo of the required documents.
  • Log into your account.
  • Go to your account dashboard, and look for a button or a link to Upload Documents.
  • Upload the documents and submit them.
  • Wait for the casino to approve your account, which usually takes 24 hours or less.

Some casinos won't have an upload link, but rather, they'll want you to send the necessary documents via email. Usually, you can find that email within the terms and conditions, or on the Contact Us page. If you can't find it, contact customer service.

Double verification

Occasionally, a casino may conduct the verification process twice to help prevent errors. The first verification will be done by the casino's verification team. The second verification employs a third-party using various databases to confirm the user's details. If the casino uses double verification, it should say that in the terms and conditions. Naturally, a double verification could take a little longer to complete.


What Problems Could Someone Have with the KYC Procedure?

Occasionally, there are issues involved with a person's identity verification. If it has been more than 24 hours, and your account has not been approved, there may be a problem.

Check your email to see if you have been contacted by customer service. There could be an issue regarding your documents. This can be due to several reasons:

Incorrect details – It's possible that the personal details you typed in, such as your address or date of birth, do not match your documents. As you are signing up, make sure to type in your information correctly. Check it over at least twice before submitting it.

A recent change of address – If you recently moved and haven’t updated the address on your documents, that could cause a problem. You may have to wait until the change of address appears on a new set of documents. In this situation, contact customer support to find out how to move forward.

Unclear photos – Be sure that your photos are clear, and show all of the necessary information.

If your casino has very robust KYC policies, you won’t be able to use your account and start playing before sending the necessary documents.


You Are Now Ready to Sign Up and Start Playing 

Now that you understand the basics of the KYC process, browse through the casinos listed here, and choose the one that is right for you.

All of our casinos are UKGC-licensed, which means they will verify your identity through a KYC process. Relax, and don’t rush it. Some casinos will not allow you to make a deposit or play before approving your account. So, get your documents ready, take clear photos, and make sure to double-check everything before submitting.


Casinos That Don't Employ KYC Procedures

Online casinos that do not require players to send any documents to verify their identity are not approved by the United Kingdom Gambling Commission. Furthermore, they are not likely to be licensed by any other regulatory agency.

The fact is, an online casino with no KYC procedure in place could be a front for a criminal operation. If you will recall in a previous section, the two illegal sports betting sites operated by New York mobsters.

Illegal gambling websites could be a front to outright steal a user's identity and credit card details. Or, they may rig the games for the house, or refuse to pay out winnings. Finally, the website could be a way for a criminal gang to look legitimate, and launder money. The fact is, you can not see behind your screen, to know what is really going on behind the scenes.

Fortunately, all of the online casinos listed on our website are licensed and regulated by the UK Gambling Commission. That means, if you sign up at any of our sponsored casinos, you can expect to go through a KYC procedure.

Keep in mind, casinos have the right to request your documents at any time, such as before any financial transaction. While a few casinos may allow you to make a deposit and play a few games before submitting the KYC documents, most require a completed KYC before making a withdrawal.


Criminal Activity Sometimes Involves State Actors

Illicit gambling websites are an international problem, sometimes involving high-level corruption. 

For example, innumerable criminal activities have been connected to Chinese offshore gaming operators based in the Philippines, including murder, kidnapping, and prostitution. Moreover, senate investigators uncovered that Chinese nationals were bribing Philippine immigration officials. For example, bribes were made to allow Chinese nationals to set up a gun range near a gated community. That's despite gun ownership being illegal in the Philippines.

Filipino security officials also raised concerns that Chinese-affiliated offshore gaming operators were sometimes headquartered near police and military installations, raising espionage concerns.

A sensational book by Washington Post journalist Anna Fitfield, “The Great Successor: The Secret Rise and Rule of Kim Jong Un”, claims that Kim Jung-nam, the half-brother of the North Korean dictator, operated online gambling sites to launder money. Not only that, some of the laundered cash was counterfeit. Kim Jung-nam did this through the land-based casinos in Macau, where he lived. 

An IT security specialist who had worked for Kim claims that his boss had a huge number of counterfeit $100 bills printed by the North Korean government. 

Kim Jong-nam met with American spies, usually meeting them in Singapore or Malaysia. That activity may have led to his assignation.

Needless to say, you would not want to risk giving your details to Kim Jung-un's brother.

Stanley Ho, the infamous Macau casino mogul, had clear connections to Beijing. Macao has long been known as a hotbed for espionage, gold smuggling, and piracy. According to US officials, Chinese criminal gangs had their own private VIP rooms in Ho's casinos. This made Macao a popular holiday for corrupt Chinese officials, where they could launder their bribes and other ill-gotten gains.


Preventing All-Around Identity Fraud

Online gambling sites are not the only websites that perform KYC. Online merchants may have their own KYC procedures. It is also important for you to protect your details, whenever you are online.

First of all, protect your bank accounts. Be very suspicious of unsolicited emails, phone calls, or letters purporting to be from your bank or credit cards asking you to confirm your:

  • personal details
  • security numbers
  • passwords

Check your bank accounts regularly for suspicious activity. Also, chase up any bank or credit statements that don’t arrive when you expect them. Shred anything with your personal or banking details, or cut it up into tiny pieces, then toss it.

Never reply to any unsolicited text messages. Simply delete them, and report them as spam to your phone company. Also, you should install antivirus software on your cell phone.

Keep your computer antivirus software and firewall up to date. Also, keep your web browser and operating system up to date.

Never click on links in unsolicited emails, they could contain malware or viruses. If you receive an email claiming to be from your bank, Paypal, or other financial institution, don’t click on any links. Open another window from your browser and go to the financial institution's website as you normally would. See if there is a message in your inbox there. Or, contact customer service to ask if there is a problem.

Also, ensure that your home WiFi and cell phone hotspot are secured with an original password. Finally, never do any sort of banking or shopping on public WiFi. Doing so risks the theft of your details.

Most victims of identity fraud never find out how their details were stolen, so you must be vigilant. Clearing up the matter after the fact can be both stressful and costly.


What to Do if You Are Victimized by Identity Fraud

Shockingly, 44% of UK residents do not shred documents containing their details before tossing them in the bin. To make matters worse, only 54% of Britons check their financial statements on a routine basis. Finally, 79% of British households throw away at least one item that could help criminals steal their identity.

First of all, report your situation to Action Fraud, the country's national internet crime, and fraud reporting centre. They will advise on the next steps you need to take, as well as any other organisations you need to contact.

Also, contact your bank or credit card company, and explain that there are fraudulent charges on your account. Most banks and credit companies have specialized departments to deal with identity fraud. They may be able to dismiss the charges, or, work out an arrangement with you.

Also, check your credit reports regularly. Callcredit, Experian or Equifax can also suggest steps to resolve the issue and prevent it happening again. Once your fraudulent charges have been confirmed as fraudulent, the bank will remove them from your report.


Enjoy Online Gambling in Comfort and Safety

With all of these tips and facts in mind, there is no reason why you can't enjoy gambling in the comfort and safety of your home. The world of online gambling can be great fun, especially if you like to try out new games.

No matter what type of player you are, always manage your budget. While playing frequently can mean more chances to win, it can also provide more chances to lose. Set a gambling budget, and stick with it. “Chasing losses” is one of the first signs you have developed a gambling problem.

Knowing how much money you can reasonably gamble without harming your lifestyle and relationship is critical. Gambling should be a hobby, not an obsession that takes away money needed for bills, school, or family. Never try to convince yourself that you can spend more than you can.

Remember to maintain emotional control and do not bet more money after losing; that is called “chasing losses”. Gambling can stimulate emotions, and if your emotions are out of control, it can lead to foolish decisions.

Ultimately, online gambling should be a form of entertainment. Gambling is not only fun and exciting, there is also the chance to win a life-changing sum of money. In fact, gambling can even be fun when you’re losing money.

Gambling is really no different from spending money on other types of entertainment, such as going to the movies. If you’re reasonable about how much money you can risk, any losses should be considered as the price of entertainment.

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