The RegTech Pulse

Playing by the Rules: KYC in Gaming

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KYC is critical for gaming companies, to keep themselves and their players safe. With the boom in online gaming, regulators worldwide are updating and issuing guidance around player onboarding and responsible gaming. In this episode, Adam Doyle, Head of Gaming for the LexisNexis® RiskNarrative™ platform, discusses the meticulous process of validating players and safeguarding them against issues like underage gambling or money laundering. He shares the subtle warning signs that hint towards troubling gambling habits and the protocols operators can employ to make informed decisions. Listen and learn how tracking a customer's typical activity pattern can help spot anomalies and unusual behaviors.

For more information on the KYC requirements for gambling operators, visit risk.lexisnexis.com/global/en/gaming-gambling. For more information on the RiskNarrative platform, visit risk.lexisnexis.com/global/en/products/risknarrative

DISCLAIMER: The information provided in this podcast is for informational purposes only and is not intended to and shall not be used as legal advice.  The views and opinions expressed in this podcast are solely those of the speakers and do not necessarily reflect the views or positions of LexisNexis Risk Solutions. LexisNexis Risk Solutions does not warrant that the information provided in this podcast is accurate or error-free.

Speaker 1:

Hi everyone, welcome back to the Rig Tech Pulse. You're here with Julia, and today I'm joined by Adam Doyle, who is head of gambling for the Lexus Nexus risk narrative platform. We're here to talk about online gaming, everything, kyc, your responsible gaming, what there is requirements are. So, adam, thank you so much for joining me on the Rig Tech Pulse today.

Speaker 2:

Thanks, julia, nice to meet you.

Speaker 1:

I wondered if you could give us a quick overview of maybe a little bit about your role, what your responsibilities are, what kind of operators you work with, and then we can dive into some of those KYC points.

Speaker 2:

Yeah, perfect. So I came over from the tune narrative business just over two years ago. I was part of the management team there, but also I had been looking after the gambling vertical. So I've been working in the sort of identity management space for about 15 years now and for a lot of that time as well as sort of supporting and management teams, a lot of it has had a key focus on the gambling businesses. I think over the years I've probably been involved in about 400 gambling operators contracting wise, and that's on a global level. So I'm hoping what I really have been doing over the last two years with Lexus Nexus is it's supporting the sales team from around the globe and helping them go through the process of initial conversations with the operators and then closing the contracts.

Speaker 1:

So you're a busy man.

Speaker 2:

Yes, my wife enjoys the six o'clock wake-ups and the 11 o'clock still on calls with the US and the the D'Atom teams.

Speaker 1:

The joys of global business. I wonder if we start our conversation today? Obviously, kyc. You know your customer, anybody. You're familiar with our work. We work very closely with financial institutions, so KYC is a very familiar term. What does it mean specifically when you were talking about gaming and gambling operators? I think specifically from an online perspective, because that's where we really seem to be focusing the conversation today.

Speaker 2:

Yeah, exactly, I think. If you just quickly look at the land-based bit, it's very simple, isn't it? If you go into any casinos, the expect to show you whether it's a drive-in license or passport, and that's very simple. In the unseen environment it becomes very challenging. But if you look at things like the UK GC, they specifically say that an operator, as and when a player registers, at that point they have to validate their player, and what they're looking to do is the initial one is they're ensuring that players are over the relevant age.

Speaker 2:

So in the UK it's making sure that someone's 18 and above. The expectations that they put on the operator is that they have to validate to name, address and date a birth and, like I said, the main reason for that is it's ensuring it's protecting players under the age of 18. On top of that as well, what they're also doing is the UK GC are ensuring that the protecting players are protecting operators against money launders and also sort of politely exposed people. So we're making sure that our Prime Minister is not spending the UK's budget on his gambling habit. And then, further down the line, what they're really doing is they're trying to ensure that the protecting players that can't afford to gamble, to ensure that they're not gambling above their means. So they're probably the core focus is that they're really looking to for an operator to carry out.

Speaker 1:

And that's that piece around this sort of responsible gaming and player safety. I mean, is there? I know that you can't share specific examples, but what would be a red flag when it comes to somebody maybe gaming more than they should be able to? How does a gaming operator get that information to make that decision?

Speaker 2:

Yeah, so there is a consultation document that's going out at the moment which should hopefully be a lot more clarification by the end of this year, but a lot of it I think, if we look at a lot of it, is common sense. So where there has been some fines, an operator, you know they have to take accountability in the sense that they've never seen this player before They've registered and within six hours they've spent over £100,000. You know, that's quite a bit. I'm going to say that that shouldn't be allowed, especially when no due diligence has been carried out. So some of the measures that have been put in place is if someone has spent more than £100, a couple of £100 within a certain time, or an annual amount or that's a lower level where they'd expect you to see right, has this person got any CCJs? Have they got any outstanding payments? And then when people have spent you know, maybe, let's say the number that's being used is £2,000 within a year, Once that carries out, they're expecting people to really sort of have a look at whether it's financial information out there.

Speaker 2:

So Kato is a system that's currently well previously been used and looking to be brought back. We do have a supplier that helps us look and get loan outcome information, so that's very good because a lot of the people that are vulnerable have probably been taken out loans, so that's very powerful. And then the other way that the UK GC is suggesting is looking at open banking information. But again, where you can have open banking information? I'm sure, like everyone who listens to this, they probably have a food account. Me and my wife, we have a food account, several hundred pounds going into that a month, and all you're seeing is on the 15th they're having this into it. You're not seeing anything else. So going down that route is not really allowing you to see any vulnerable activities.

Speaker 1:

So it's kind of a combination of various different factors and also that common sense it triggers. Yeah, yeah.

Speaker 2:

It's very much triggers. If you once you you know once someone's been on a website for a while, you can see what their typical pattern is. For example, me, on a Saturday, I might bet on horse racing and football, and I'm typically spending £50 on a weekend, whereas if one weekend I'm now spending a thousand and I'm betting on the next available bet, whether it's horse racing, football, ping pong, tennis, that type of stuff. That's another good indicator that this probably person's either one their accounts being taken over or two they're now potentially subring from an addiction issue.

Speaker 1:

Can't you, can't you. And so I suppose there's a lot to consider in terms of obviously carrying out the right checks, ensuring that player safety, ensuring that responsible gaming is there. When you speak to compliance officers at these gaming firms and you know, when you go in and have these initial discussions with them, what is it that you think? What do they really struggle with? And so that's keeping them up at night.

Speaker 2:

The things that you really see now is especially let's call it these tier one operators. The amount of transactions that they're going through. It's crazy. We're talking hundreds of thousands of transactions a day.

Speaker 2:

What we see with some operators is they're either using old technology which, as their volumes have grown and as they've grown as a business, they sticky tape and blue tack something together to try and help them, which really it normally takes about five people to pull the report and seven days. So the struggle is it's staying on top of that as and when it's happening. That's something really where Lexus Nexus is a business where we're really helping people because we have the ability to monitor people as and when the transactions are going through. So when a flag is hit, we can freeze an account, we can flag it to the compliance team, so that's something that really gives them peace of mind that they're not 24 hours but after the incident has happened. So that's really where we try and give a compliance person peace of mind is that they know as and when someone hits a threshold that they deem something needs to happen. Our system makes sure that happens straight away.

Speaker 1:

And we were talking before in earlier conversations outside of this podcast. You mentioned there was a phrase about the single view of a player. Can you maybe explain that, because that's quite an interesting concept.

Speaker 2:

Yeah. So the one point that the UK GC really took about is having this single view of the customer. Unfortunately, at the moment, what you have in the gambling space is sharing data is something that's not really there, because it's a lack of trust. Operators believe that if they flag that someone's hit this level, people will just stop putting their VIPs on there. So when sort of VIP tries to come on there, they'll be flagged is don't touch them. So when we talk about a single view, we're talking about we're talking to get a single view of the operator, so let's say, of Adam Doe.

Speaker 2:

So what? We have the ability with all the different products that we have a Lexus Nexus we have the ability from point of registration so we can look at devices of this person. So, using the likes of threat metrics, we can actually see has this person been associated with bad activities previously? Then, obviously, with the different products that we have globally, we have the ability to look at this person's name, address and date of birth and ensure that, at the right age to play, and as and when this person's starting to spend and deposit whether it's three days or whether it's three years we can constantly be looking at the amount of spend, what the best and gone the time that they've been playing. So the operators, they'll have their own risk based level of. We don't believe that this person should be playing more than three hours on slots every seven days.

Speaker 2:

So with this system, not only were we able to look at data, we're able to look at the ability to communicate.

Speaker 2:

So, as and when this happens, we can actually it can be on a chat box where they could have a chat with someone and say actually it's two o'clock in the morning on a Saturday.

Speaker 2:

Typically people are playing at this time of this amount. I've been out drinking and they think they're the next big poker player when they're not. So it's that instant and ability to be able to communicate and demonstrate to the operator, to the regulators, as and when these points are happening You're actually on the ball. And it's the same with questionnaires as well. Once people are hitting certain thresholds, you actually be able to have a questionnaire and sort of ask them the questions of should you be spending this amount? And that's really the point. You want the ability to have a view of that whole customer's life cycle, from day one to five, ten years down the line, and be able to demonstrate that, as an operator, you're going above and beyond to make sure your players are using this as an entertainment side and not using it as an addiction side that could cause issues to themselves and their family members.

Speaker 1:

On that point, then, because obviously we've talked a lot about triggers in place to stop people when they are getting to a point where it's becoming problematic. We've talked about making sure that people are who they say they are and conducting those KYC checks. When you've got people who are just like you said, on a Saturday, you want to bet on some horse racing, you want to bet on some football, how do operators balance that? Customer experience is huge and we've just released a study which puts customer experience in terms of top of priority for compliance officers. How do they ensure that the checks and making sure that you're aligned with the requirements isn't impacting this customer experience for genuine players who just want to have a good time, who don't have a problem and they want to be on board quickly and they don't want to have to go through various blockages if they are just wanting to spend £50 on a football game?

Speaker 2:

Yeah, I think that's probably over the next year to three years where the biggest challenge is coming from the operators, because what we're really seeing now is that the regulators around the world are starting to treat gambling rather than as an entertainment. Now it's starting to treat it as going through a loan application these points that they're talking about when people are hitting and spending this amount of money. You need to know more. You need to know more. That's really where the challenge that the operators are having is one, making sure that they're aligned into regulation, because obviously they don't want to be hit with a significant fine. But two, they don't want to make the player think. Well, actually I've been asked less questions when I've gone for a loan or a mortgage, so that's where it's really the juggling act.

Speaker 2:

I think what we're really going to see, especially in the UK with the new consultation document, is that it's trying to make it a level playing field, and what I mean by that is gamblers are not loyal. So where you'll have whether it's retail brands, shopping brands you can build that loyalty, but with gamblers there's not. They're looking for quick, fast and seamless. So if I go on one website and they're asking for my savings and my pay slips. I'm just going to go to the next one until you actually get on, and that's one of the things that operators are really asking for that if it's a level playing field and people everyone's asking for this or everyone's not asking for this, that's fine. And I think that's what a lot of operators are hoping with the new regulations is that it's going to be clear, it's going to be precise and it's going to be saying everyone has to do that. And by doing that, it's fine, because whether I'm a player going on one site or a player going on the other one, the expectations is exactly the same.

Speaker 1:

And so, while operators are waiting for those new responsible gaming outlines, what in your mind? You've been working in this industry for many years. What is a comprehensive compliance process in terms of doing the right checks, balancing customer experience? What are some of the key things that should be considered?

Speaker 2:

Yeah, I think when a player initially signs up, it's obviously an operator needs to get an understanding of what's this person's habits. What do they typically do? So to start off with a lot of it is common sense. If I just come on there and I'm standing thousands of pounds, that's something where you're going to have to have a look at this. At some point you will have to ask someone for how much do you earn? Let's have a look at your pay slips. But I would say the majority of people are keeping that sort of low level amount where it doesn't look stupid. It's a 10, it's a 20 pound bet on the weekend.

Speaker 2:

So I think it's really just where and again going back to what LexusNexus do is a business. With our transactional behaviour and monitoring, we're able that an operator can actually hardwire in the regulators outlines of what is expecting and what they class as worrying indicators. And also as a business you'll have with these different operators, the big ones, which are PLC companies they're obviously going to put in a high level of risk than some newer sort of business, or let's call it a tier two or tier three. So it really comes down to the companies what they believe is ethical, but what we try and do is we try and allow them to implement the right stuff, where, if someone is coming in and they're starting to spend thousands of pounds within a first day or a first week, that's where we give them the ability to communicate with the customer and say right, we are doing this as a regulation requirement, but we're also doing it ethically, to make sure that you're not spending more than you should be able to spend in the gambling environment.

Speaker 1:

So okay, so kind of factoring in the right. The right pressure is up front, but then also the right triggers throughout kind of the playing cycle.

Speaker 2:

Yeah, yeah, and to your point, before, it's balancing it, it's making sure that when they are starting to have the communication with the player, it's making sure that they're aware as they're doing it, because they're trying to protect you and making sure that you're using their services as an enjoyment rather than using the inch their services to chase a loss or you might be struggling with money and it's to pay for your next bill.

Speaker 2:

So that's really where it's defined balance and, like I said, there are going to be new guidelines that coming out, but a lot of it at the times where it is common sense, people should not be spending X amount of money. And if they do, I suppose if you're going for a loan and you want to borrow £5,000, you know that actually they're going to ask me for this information. So again, I think where we talk about education from the operator side, it's actually got to be players education as well, and they've got to realise that when people are spending certain amount of money, yes, it is your money, but again, the operators are given expectations to carry out these relevant checks. So I think it's a player education. So if you look, for example, in Sweden Sweden they have no issues giving any operator any information. If I didn't ask a Swedish player to provide a certain amount of information, they would probably think, well, is this a dodgy website, because they're not asking me for this information? So I think in the UK players especially, it's an education process.

Speaker 1:

Got you and obviously we've talked about the UK Gaming Commission. You've just mentioned Sweden there. Is there anything that operators, if they're looking to move from the UK, if they're looking to move into emerging markets? Obviously online gaming is being legalised and it's starting to open up in a lot more markets. What can these operators take maybe from the UKGC regulations when it comes into moving into emerging markets? Can they do a copy paste and maybe tweak it from there to help them speed up? Or is it a complete overhaul, depending on the regulations?

Speaker 2:

Yeah, I think if you follow the guidelines of the UKGC, you won't be far away from being in the right place. To your point, yes, there is probably tweaks. So when you look at different regulations, jurisdictions around the world, they might not say right, you're doing it on registration. It might be on first deposit or withdrawal or spend of a certain amount. So, touching back on what the benefits that you'll find, obviously from the Lexus solution is, you don't want a one size fits all Because, for example, what the UKGC is asking if you move to the likes of Malta, the UKGC is probably tighter than what you need.

Speaker 2:

So, again, it's making sure you have a solution that fits the regulation as it's supposed to be. So, again, with the Lexus solution, what we're doing is whether it states whether it's different countries, you can specifically tune the rules to meet the relevant regulations. And again, what that's doing is it's making sure that you're playing in a level playing field. If you're applying the UKGC regulations in, let's say, in an Asia market, you're just basically going to be kicking out a load of customers where you don't need to because that regulation piece is not in place in that country. So, again, it's specifically having the right rules and responsible abilities in each state country jurisdiction Perfect.

Speaker 1:

And that's a nice wrap up, I think, to conclude this episode. I think, Adam, if you were to leave Listus with one piece of advice, particularly for gaming operators who this is relevant to, what would that be?

Speaker 2:

Yeah, I think one of the things that we're really seeing is that there's a lot of research being carried out by companies to understand addiction issues and also how people play in an online environment, and I think I mentioned it before. There is a lot of transactions that are going through these operators. It is physically impossible to deal with this with humans just sitting there and dealing with every transaction as it's going through, and technology has significantly improved since the late 90s when the gambling market started, and also there's a hell of a lot of data out there. I think unless operators really start embracing the technology and data, it's going to really impact with them with fines. So data and technologies there, use it, because not only will it ensure that you don't have any issues with fines, it will also make the customer journey far better and again it will reduce the amount of work that you're having to do from your customer service teams.

Speaker 1:

I hope that's great. Thank you so much, adam Doyle. Lex and Lex for the Risk Solutions Really appreciate your time today.

Speaker 2:

Thanks to you, Liz.

Speaker 1:

And for anybody who's interested, we will include a couple of links to some relevant content and also to some of those products that Adam mentioned in the podcast. So thank you so much for tuning in and we will see you again next time on the Rig Tech Pulse.

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Julia Thorn

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