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IN-DEPTH 15 August 2016
EU AML compliance needs data and collaboration
There’s a smarter way to comply with the regulation says Andrew Davies, VP of Global Market Strategy, Financial Crime Risk Management, Fiserv
By Gambling Insider

The popularity of online gaming has increased rapidly in the last few years thanks to its ease and accessibility for customers. The industry has reaped the rewards, with the market set to reach nearly $464bn globally by the end of this year. Alongside this growth, electronic gaming companies have also experienced an increased focus on industry regulation, with the recent introduction of the 4th EU Directive on Money Laundering.

The latest EU directive means that online gaming organisations are required to carry out risk -based due diligence on their customers and monitor activities to ensure no suspicious actions are taking place though their services. Gaming companies are required to ensure that no proceeds of crime are being converted into legitimate assets through their organisation. The UK Gambling

Commission continues to take decisive action against those companies who do not comply with these new initiatives. A recent example can be seen when Paddy Power was ordered to pay a £280,000 settlement because their anti-money laundering controls were not meeting industry standards.

In order to bring a measure of risk governance to the gaming industry, companies need greater insight into their customers and a clear understanding of the sources of their funds. Understanding each customer profile and analysing data patterns for suspicious activities is essential for companies to be able to meet these regulations. Complying with legislation not only benefits companies financially, but also helps protect their reputations.

AML Risk Factors

Companies looking to adopt AML programmes and technology are doing so to comply with the new legislation; however they are also mindful of the reputational risk and social responsibility involved. When it comes to reputation, if a company is found to be a vehicle for money laundering activities, they could suffer greatly. Customers feel vulnerable to the stigma of illicit activity and weak security, and many will take their gaming to a more respected organisation. Companies also have a social responsibility when it comes to money laundering. They need to work with regulators to do the right thing and help stop the proceeds of crime filtering through their industry. By doing so, they are ultimately helping to end organised crime around the world.

Know your customer

With these elements to consider, electronic gaming companies must implement successful programmes that are effective, appropriate and cost effective. Organisations need to capture and scrutinise data on each of their customers to determine the AML risk associated with each one. For example, is someone politically exposed or do they reside in a high risk jurisdiction? Technology enables companies to automatically gather and analyse customer data and evaluate it against a scorecard system. Measuring the AML risk associated with each customer means companies can identify suspicious information straight away.

Technology can compare customer behaviour relative to other customers and leverage best practices to accurately detect money laundering activities, while also helping gaming companies improve operational efficiencies. Taking a risk-based approach to knowing each customer means an organisation’s compliance lens can focus on genuine suspicious activity and allow legitimate customers to game without disruption. In order to give their customers the best experience of gaming with them, it is vital for electronic gaming companies to know which customers are suspicious and which are behaving normally.

Industry collaboration

With organisations looking to data to provide them with a more comprehensive view of their customers, there is an increased willingness from companies across the industry to explore the opportunities of collaboration. By collating and analysing data from a variety of sources, a broader picture of each individual can be created. This is consistent with other industries, like financial services, where the sharing of information is viewed as mutually beneficial to the industry as a whole.

Gaming companies that don’t keep pace with industry changes and apply AML compliance best practices could face large fines or loss of consumer trust. Through the use of data, organisations can create a clear picture of customers and analyse for suspicious actions in real-time, flagging those activities which need to be investigated efficiently without disruption to others. Collaboration and sharing data across the industry will not only enable companies to adhere to these new regulations more quickly, it also means that genuine customers are recognised as such and left free to enjoy their gaming experience.

Andrew Davies is responsible for seeking new markets and applications for Fiserv’s financial crime detection and prevention solutions. He has worked in the software solutions industry for twenty four years and, in that time, he has worked with many of the world’s largest financial institutions, both private and public
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