AML Compliance in Gaming: Knowing Your Customer Lays the Foundation

Clarity is usually a good thing when it comes to meeting federal regulations, but in the case of AML compliance for the gaming industry, there is no one-size-fits-all response. Federal regulations aimed at preventing money laundering require properties to make many of their own decisions on what is best within the law.

Casinos must strike a balance between AML measures that are thorough enough to meet regulations, but that do not unnecessarily exclude patrons, and that do not detract from the welcoming environment they wish to create. The American Gaming Association’s Best Practices for Anti-Money Laundering Compliance shed some light on the matter, but leave individual properties with plenty of their own judgment calls to make.

Garbage In, Garbage Out: How KYC Fits into the AML Picture

Know Your Customer (KYC) measures are an important part of AML compliance, as they help properties identify patrons who may present a higher risk of running afoul of regulations. But even within this one aspect of the issue, undefined areas remain.

The AGA best practices include recommendations on ID verification and advise against accepting ID documents that show “obvious indications of fraud.” But as casino workers know, many fraudulent IDs won’t have these “obvious” signs, and a high-quality fake ID is easily attainable for the type of criminal who would use a casino as a money laundering outlet.

This is a “garbage in, garbage out” situation for the casino in terms of AML compliance and fraud protection. No amount of list checking or post-visit investigation can repair the initial error of admitting a patron with a falsified ID document, since their entire player profile is built on that false identity.

This is a situation where performing ID authentication versus simple verification can help the casino do a better job of protecting itself and complying with AML laws. Using an ID scanner and software, ID authentication compares the barcode data on the back of the ID to the printed data on the front, and uses multiple light sources to check that the ID’s proper security features—such as state seals and light-absorbing inks—are present. This check can be performed in real time, before admitting the player to the gaming floor or enrolling them in the player’s club.

When this ID authentication technology is coupled with facial matching technology that compares the photo on the ID to a live image of the person presenting it at the casino, properties can have much greater certainty that the players they admit are who they claim to be. It’s a different application of the two-factor authentication concept, confirming both the validity of the document and the facial match with the document holder.

List Checking Adds Greater Certainty

In many cases, the casino must work to ensure AML compliance even after a patron is initially admitted. Checks against watch lists can be performed immediately for a single player, or periodically for a property’s entire player’s club. This periodic “rescrubbing” of the player list can help catch criminal convictions or other suspicious activities that occur after a player is admitted to the club.

In some cases, risk assessments will also indicate a need for enhanced due diligence or determining a player’s source of funds. By performing these checks, the property can ensure its AML compliance program is working rigorously to protect against fines and losses.

Enhancing the Culture of Compliance

The AGA best practices refer to the need for casinos to create a “culture of compliance” among personnel from the top to the bottom. Board members and senior leadership must contribute to AML compliance by setting policies and making sure employees have the tools they need. The right technology can provide valuable assistance for employees at all levels in the organization, by making it easier for ID authentication to work as intended. With that piece of the KYC puzzle in place, properties can have much greater confidence in their anti-money laundering efforts.

Published: 10/23/2020