It is a widely established practice that a regulated institution which accepts money from the public must have authentic information of its patrons. This is why institutions, such as banks, fintech, mortgage and insurance companies all demand up-to-date information from customers. However, in light of ugly terrorist activites, racketeering and money laundering around the world, more countries are taking due diligence quite seriously.
Consequently, the global gambling industry, as a major entertainment industry generating billions of dollars annually, is required to have such accurate information about players. Several countries in Europe, North America, Oceania, Asia and Africa have anti-money laundering (AML) laws. In addition, they have Know Your Customer (KYC) procedures designed to acquaint an gambling operator with each customer.
With AML and KYC procedures adopted by gambling operators in Africa, their operations appear to fall within the designed purpose. Hence, this article takes a detailed look at how these procedures work and their efficiency to operators.
AML and KYC Around the World
Gambling Companies can be the target of individuals wishing to launder illegal money by registering an account with casinos and bookies. In the USA, casinos are treated as financial institutions for the purpose of AML compliance. The Anti-money Laundering Act 2020 provides a legal framework for AML activities. The Bank Secrecy Act (BSA) facilitates due diligence compliance and swift action against money laundering.
NOTE: A gambling operator in the US generating revenues of over $1,000,000 is classified as a financial institution.
Such an operator must comply with BSA requirements on AML and register as a financial institution. This is why all gambling operators in the USA must have AML and KYC programs. Such programs must be in compliance with the Financial Crimes Enforcement Network (FinCEN) Procedures.
In Canada, strict AML and KYC procedures and regulations are made for casinos and bookies. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act establishes and empowers the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
FINTRAC issues guidance and due diligence notices which operators must comply with in detecting and complaining suspicious transactions.
The newest FINTRAC guidance imposes stricter KYC measures and procedures on Canadian gambling operators. Operators must further verify an existing account that deposits $10,000 or more with them subject to certain exceptions. Furthermore, the FINTRAC guidance mandates all casinos and other operators to screen politicians and heads of international organizations, their close partners and family members before registering them. There are guidelines for such screening, which must be complied with.
With Europe having one of the most formidable regional unions in the world, you can expect top-notch AML and KYC rules. From time to time, the European Union U) releases AML Directive to bolster its strict stance against money laundering. The 4th AML Directive (4AMLD) placed more stringent responsibilities on gambling operators to identify customers.
Such identification must include authentic documents and information from reliable sources. The 5th and 6th AML Directives of the Union consolidate existing KYC and AML procedures in terms of deposit limits, regulatory authorities, suspicious deposits among others.
In the UK, the Gambling Commission (UKGC) operates on a regulatory framework of compliance with rules on AML and KYC. It is compulsory for all operators to comply with Licence Conditions and Codes of Practice (LCCP). The UKGC has also published its risk assessment: 2020 for gambling operators to adopt when conducting KYC on players.
The guidance on the prevention of money laundering and combating the financing of terrorism, is a comprehensive guide to all operators. Among other things, it provides customer due diligence and what amounts to suspicious activities, as well as KYC procedures.
AML and KYC in Africa
No doubt, the gambling landscape in Africa is far from what obtains in other regions. As a result, AML and KYC procedures are not as robust. This is because not every African country has a huge gambling market. The larger market share is held by South Africa, Nigeria, Kenya, Uganda and Ghana.
The South Africa National Gambling Board makes it compulsory for each gambling operator to train its personnel in the detection of unusual deposits. It partners with the Financial Intelligence Centre (FIC) to issue guidance and instructions to the gaming industry on how to handle KYC. All gambling operators design a system for AML and KYC compliance and such a system must be in line with several notices published by the FIC and the Board.
Operators in Nigeria are also mandated to comply with AML and KYC regimes, but these are usually shallow. Such regimes are not as strict as that of South Africa with an established collaboration of regulatory bodies to achieve the best KYC possible.
Ghana recently made KYC and AML verification a compulsory part of gambling in Ghana. The Ghana Gaming Commission and Financial Intelligence Centre made it mandatory for any individual engaging in gambling to have their identity ascertained. The operators must report suspicious, unusual deposits by a particular player.
Efficiency of KYC and AML to Operators in Africa
Physical gambling agents are scattered across the nooks and crannies of several countries in Africa. There lies a big issue with verifying the identity of players who gamble with such physical agents. In the far majority of cases, their identity is not known, and online gambling is not an option to them.
TechBullion reports that AML fines reached $1.9 billion in 2021. With proper mechanisms for KYC and AML compliance in the online space, operators have managed to avoid heavy fines. Before paying out huge wins, some operators require fresh verification and sometimes a walk-in to their office.
This practice scares off criminals from such operators, making the operator much more appealing to well-meaning players. However, more efforts should be made to capture and verify the identity of offline gamblers in Africa.
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