Every business that operates within the gaming industry must comply with AML. Although legally established AML compliance in gaming programs and all other casino operators exists, a risk-based approach goes beyond basic requirements and mitigates threats in a more enhanced manner. With new threats and the growing sophistication of criminal money laundering, there is a call for a more advanced approach. The solution is to adopt a risk-based AML program that transcends minimum requirements and raises the bar on protection against financial crime, the best barrier against money laundering tailored to fit the business of gaming.

It enables gaming operators to concentrate on those areas that present the highest risks. The risk-based approach does not use the one-size-fits-all approach for all. So, threats can be identified more. Companies can devote resources to compliance and implement accurate controls that lower their exposure to the most significant risks. 

Let’s discuss applying a risk-based approach to AML in gaming.

Understanding Money Laundering Risk in Gaming

Over $2 billion in criminal funds passes through online gaming sites. Criminals capitalize on games of chance and faceless electronic payments to mix dirty money with legitimate winnings. 

Gaming operators need to start building their AML in Gaming by setting up a practical risk assessment. Once again, in addition to ensuring updated AML Regulations in Gaming for the sector, a sector-risk evaluation will be conducted to identify sector vulnerabilities and then prioritize mitigation efforts.

The Risk Assessment Framework

The gaming operators will need a standardized methodology to assess these inherent risks. When creating a risk assessment framework for an organization, the first step will be to include a list of the possible threat scenarios facing the industry concerning potential money laundering and tax evasion. Possible threats can be anything from issues related to deception to account takeovers and Agent fraud. 

Once the threat is identified, the next step will be to assess the likelihood and potential harm of a threat based on product type and customer base. Rating scales such as Low, Medium, and High present a simple risk scale.

Categorizing Customer Risk

Effective risk-based systems rate each customer as high, medium, or low risk. Operators develop red flags based on their unique business in an attempt to flag risky actors. A high frequency of max bets, or anonymous digital wallets of VIP members, is an example of how they do that. Monitoring software can then be set to red flag accounts showing multiple flags for a manual review. 

Risk-leveling helps gaming firms zero in heightened due diligence and transaction monitoring efforts on only the riskiest customers – meaning those most susceptible to money laundering. This prioritizes compliance resources and cuts the costs of universal policies.

Ongoing Transaction Monitoring

After customers are onboard, transactional activity has to be monitored for any anomalies under AML for Gaming rules. For example, a typical red flag would be a payment that increases by 500% after years of modest activity. Automated monitoring software flags, such as red flags, for further manual review. It is estimated that 75% of all laundered funds go through legitimate accounts before alerts are raised. Constant scanning is thus vital to establish the layering and integration stages of money laundering. Robust transaction tracking gives gaming firms real-time intelligence to establish the AML Foundations for Gaming that are necessary to preempt criminal behavior.

Review and Update your Risk-Based Program

Risk environments are not static, so gaming companies must re-evaluate their programs from time to time. Every 6-12 months, operators should re-examine the collected intelligence and tuning indicators. Geopolitical events may upregulate risks from certain jurisdictions. Emerging fraud trends also necessitate adjustments. A debrief after substantial seizures assists in re-profiling high-risk typologies. Maintaining a periodic review cycle underpins resilient AML programs. Such measures ensure that the frameworks are kept up to date as threat landscapes evolve and gaming firms are able to improve their risk-based approach to financial crime.

Benefits of a Robust Risk-Based AML Compliance Program

  • Provides a more accurate understanding of the risks: dynamic view of changing risks that result from continuous updating, as opposed to the static view of an infrequent review
  • Stops the cost of compliance
  • Increases the ability to detect suspicious activities: extending the monitoring into high-risk behaviors increases awareness of potential indicators for suspicious activities
  • Reduces necessary friction on the experience of the customer: by reducing necessary friction on legitimate low-risk customers, it actually increases the ability to at a level greater than would be the case without such requirements.
  • Reduces unnecessary friction on the experience of the customer. 

A risk-based approach in the context of AML focuses with more precision on the greatest threats to the gaming business. Obvious benefits accrue: stronger defenses against financial crime, reduced cost of compliance, and enhancement of player experience.