KYC (Know Your Customer): Why Casinos Ask you for Documents

Know your customer (abbreviated as KYC)is a process financial or finance-related organisations use to identify and monitor clients.

The information collected through the process helps the financial or finance-related institution to prevent money laundering and other criminal activities. It also enables the institution to monitor clients’ activities and provide appropriate services.

The need for KYC emerged in the 1980s when offshore banks were increasingly used in money laundering schemes. All financial institutions must establish procedures to identify their clients to combat this.

In 2010, the Canadian government extended these requirements to all financial institutions and the ones that process any transactions in Canada.

Each online casino Canada defines its procedures for customer identification. These procedures should identify all the clients the institution serves. It should also determine which functions the identified customers can perform.

There are three components that KYC at online casinos include:

• CIP (Customer Identification Program).
• CDD (Customer Due Diligence).
• CM (Continuous Monitoring).

Each of these elements is important for a casino to know when performing KYC, so I will examine each one in turn.

Moreover, these three elements are also common in other industries, such as finance and banking.

Any company that is involved with financial transactions must carry out KYC whenever they discover changes to an individual's account.

To cut it short, any online casino will ask you to provide proof of your identity (normally done via passport scans and other documents) when you reach a certain minimum level of funds with them, or if you request to withdraw those funds.

Triggers for KYC include but are not limited to

• Players engaging in dishonest or suspicious behaviour.
• New patron information.
• Change in employment status.
• Unusual patron activities and transactions.

Therefore, the importance of a KYC can’t be understated, and it’s a crucial component of the gaming regulations to ensure players are who they say they are and that funds are not being laundered or come from an untoward origin.

Most businesses that offer products or services to the public must comply with anti-money laundering (AML) laws. These rules identify and prevent criminals from converting ill-gotten profits into clean money. The information businesses need to know about varies depending on whether you’re doing business as an individual or a company.

The main difference between the Know Your Customer and Anti-Money Laundering is that AML is mainly to identify the source of money. In contrast, KYC is to identify the risks of doing business with a particular customer.

While both these systems aim at dealing with financial crimes, they don’t have the same objectives. Let us see how they differ from each other.

Know Your Customer and Anti Money Laundering laws stipulate that customer identities (both private and corporate) be verified as legitimate to avoid fraud and money laundering.

Having multiple accounts can be a pain when it comes to knowing your customer verifications. It’s easy to open multiple accounts if you often travel or have multiple connections in different countries.

However, each new account you open puts another dot on the map for your identity verification. It can become a veritable puzzle that’s challenging to solve, especially if some of the accounts are tied to an address.

This problem will become even more prevalent as more companies require KYC verification to access their products and services. The good news is that digital identity verification is expected to reach $40 billion by 2026.

If you have numerous gambling accounts with activity, chances are you've gone through the KYC verification process several times.

Although a tedious process for you, company A cannot recognise that the details you submitted to company B are legitimate. They are not allowed to share customer information with third parties except when submitting a Suspicious Activities Report to authorities.

All financial entities, including crypto businesses, should develop their own Know Your Customer (KYC) process to comply with any AML standard in their country and jurisdiction.

Many Canadian gamblers need clarification as to why casinos need to use the KYC regulations when we can go through them once and be done. After all, isn’t one time enough to establish a person’s identity and trust in a company? The answer is no, and here’s why.

In its most basic form, the purpose of KYC is to ensure that a company does not work with criminals or individuals that would harm its business.

This is a positive thing, a sign that more industries are moving towards better identity verification. However, this move has a downside, and it’s the need for diversity in the information collected about a person.

For example, let’s say an online casino does its initial KYC with a potential customer. They collect their name, date of birth, and maybe even address.

Great, right? Not so fast.

The problem is that these types of data are relatively static. If someone uses multiple identities to play, that’s a red flag, but most people won’t have a problem with this because their names and birthdates don’t often change.

On the other hand, online casinos need to check if any gambling authority has blacklisted a player periodically. To do this, they need an individual’s gambling ID, which is often tied to much more information such as their address, bankroll, etc.

This identifier is unique, but it may not always be, which is where the issue of diversity comes in. If a person gives us multiple identifiers that aren’t any different from the data we already have on file, there’s not much of a reason for us to do additional KYC.

After all, if we already have their name and address, why would we need any other information?

Therefore, if a casino gets a gambling ID, bankroll report, and address from one person once, they’re probably not going to get them again if they request it a second time.

As a result, online casinos need hundreds of identifiers to identify players, which is a huge problem.

Why Are Multiple Identifiers Required?

As mentioned above, if a player uses multiple identifiers with the same information, it can indicate that they’re trying to hide something.

However, if those identifiers come from different data providers, they may still provide the same level of information.

Let’s say I use the same name and address when I create an account with two different data providers. If those companies have my information already, there’s a good chance that the new account is mine.

However, if those companies get their data from completely different sources, there’s less chance that this is the case.

This is the case in the gambling industry. As a customer, when you provide the same information to multiple companies, they might not be getting it from the same source.

For example, one casino may get your name and address from a casino, while another might get it from a sportsbook. The latter is less likely to have the same information, meaning they’re unlikely to identify the same person. This makes it more likely that the casino will approve new accounts.

The KYC process has been a staple of the finance industry for years. However, as gambling moves online, companies face new challenges in ensuring clients are verified correctly.

The result is that many gamblers get frustrated with the process and don’t feel like investing their time in a casino that would require much time to verify. It’s becoming an instant deterrent.

That’s why you must implement tips that speed up your KYC process, so players don’t get frustrated and naturally avoid casinos that take too long to verify their clients.

There are thousands of online casinos, and the know-your-customer process of those might slightly differ as it depends on anti-money laundering legislation applicable in their jurisdiction, licenses and markets.

While the exact required documents may vary from casino to casino, the KYC process shares at least one common feature: Casinos will request documentation from you, usually a photo ID, credit or debit card, a utility bill, and/or a bank statement.

I will discuss several tips to assist you in moving faster through the KYC process with the following aspects:

• Proof of ID
• Proof of address
• Proof of payment method(s).

When playing in a casino, you won't be allowed to sign in if your account gets frozen due to security checks.

The online casino may deposit the money from the account with a third-party processor. The funds will be returned to you when the due diligence process is complete.

Please remember that a failure to adhere is subject to legal action, including injunctions and orders for specific performance, with monetary damages possible.

Unfortunately, the Know Your Customer (KYC) process is necessary when you want to withdraw your winnings, or it can seem inconvenient. But know that the KYC process is quick if you follow the instructions.

KYC procedure prevents identity theft, underage gambling, and money laundering.

A summary would be that KYC is widely adopted and used by serious and legitimate businesses that you leave money with and is in place at the end of the day to make sure you are indeed who you say you are.

I sincerely hope that this page is useful for you. Besides, I believe that at the moment, you realise how everything related to the KYC procedure functions.