Know Your Customer (KYC) in Crypto Gambling

What is KYC and Why is it Important?

KYC is the process of verifying the age and identity of users at online crypto betting sites. It’s critical for a variety of reasons, but the four main factors are as follows.

Complying with Legal and Regulatory Requirements

A regulatory license is often a significant part of a casino’s identity. It has specific requirements of the online site, which it has to adhere to. One is to ensure the identity and age of the user. When a site completes this verification, it ensures the bettor is legally able to gamble and protects everyone from legal challenges.

Preventing Underage Gambling

As already mentioned in the previous point, age verification is part of the KYC process. Checking the player’s age allows the crypto casino to verify the bettor is legally old enough to bet. As a result, it keeps the betting site legal but also ensures underage users can’t access the casino services and therefore prevents underage gambling.

Detecting and Preventing Fraud and Identity Theft

Fraud is a substantial risk with e-commerce. Even using a card at brick-and-mortar stores can lead to card cloning, which then allows fraud even for people who don’t use the internet. KYC stops this from being an issue, as users must prove they are who they claim to be. As a result, a cloned card is not a possibility as it won’t match up to the account holder.

Ensuring Responsible Gaming

KYC helps casinos to prove who the player is. If there’s a player with a self-exclusion, it allows the casino to check if this is the case and continue the exclusion. So, betting sites can protect users who have a potential gambling problem and ensure responsible gambling.

The three components of KYC

The CIP: Customer Identification Procedures

The first stage is to identify the customer. It involves handing documents to the casino to verify the player is who they say they are. An example could be a driving license or passport, but some sites will have a lower barrier of proof.

The CDD: Customer Due Diligence

CDD takes place over the lifetime of the player’s membership at a crypto casino. It will mainly focus on assessing customer risk. So, a player who makes significant deposits may require a check on their finances to ensure they have the funds available.

The CM: Continuous Monitoring

The name for this factor is self-explanatory. After completing the initial KYC checks, the casino must continuously monitor the actions of the player. So, if deposit amounts increase or the player self-excludes, the site must take the appropriate action in line with their KYC policy.

Triggers for KYC Checks for Existing Customers

Although some sites don’t have KYC checks upon signing up, there are actions which trigger a check. Some sites will trigger further checks after the initial sign-up process as part of its continuous monitoring policy.

Large withdrawals or deposits

Making significant transfers will typically lead to a KYC check. Users who often carry out substantial deposits and withdrawals will generally avoid further verification, but players making a change to their usual activity are likely to have extra checks.

Frequent or significant account activity

Users who spend a lot of time using their accounts will have regular checks. It’s to ensure there are no changes to the usage of the profile. Bettors who regularly access their account are most likely to get additional verification.

Change in personal details, such as address or name

Whenever a player changes their details a further check is a requirement. It’s to ensure the account is still under the control of the original player and they haven’t been the victim of a hack.

Suspicion of fraudulent activity

If suspicious behavior takes place the casino will carry out a check. It’s to ensure they aren’t complicit in illegal activity and to protect both the user and the casino.

Random or periodic checks to maintain compliance

Some regulators require online casinos to complete regular checks as part of their audits. So, it means some users will have to carry out more verification so the betting site can retain its regulation.

What is the Difference Between KYC and AML?

KYC purely focuses on ensuring individual bettors are legitimate. So, it covers their identity and age. AML is to ensure the site isn’t being used for money laundering. As a result, it focuses on payments in and out of the casino, looking to stop users from laundering money and prevent illegal activity.

How to Speed Up the KYC Process?

Although it’s not possible to speed up the process beyond how long a KYC takes, users can ensure there aren’t any delays. As a result, it ensures players can begin using their casino account as quickly as possible. There are five steps to take which will ensure the casino completes verification without any holdup.

1. Have up to date copies of all required documents
2. Don’t leave the casino waiting when uploading documents
3. Ensure all information the site asks for is completely accurate
4. Use customer support to check on KYC requirements
5. Make sure to regularly check messages on the account to provide all material the site requires

Conclusion

Although crypto bettors look upon KYC as a negative, it has positive consequences. It protects the user and the operator by ensuring all activity at the site is completely legal. Players also get better responsible gambling protection with KYC, as it ensures self-exclusions can become active across multiple sites. Although it removes complete anonymity, financial privacy is still possible through crypto payments, so it’s not a complete negative.