As part of European Safer Gambling Week 2024, the European Gaming and Betting Association (EGBA) and Sumsub hosted a pivotal webinar titled "KYC and Safer Gambling: Tackling Fraud with Technology." Industry experts gathered to discuss how advanced Know Your Customer (KYC) procedures, bolstered by emerging technologies like artificial intelligence (AI) and biometrics, are transforming player protection and fraud prevention in the online gambling sector.
The Evolving Importance of KYC
"KYC plays a critical role in reducing the likelihood of underage gambling by verifying the customer's or player's identity and age," said Eleni Panagiotopoulou, Head of AML & MLRO at Softswiss. "We can ensure that only eligible individuals gain access to gambling services, which is very important to help protect vulnerable populations."
Panagiotopoulou emphasised that effective KYC practices are essential not just for compliance but for fostering a safer gambling environment. "Through robust identity verification and ongoing monitoring, we can spot suspicious activity, spikes in activity, and unusual deposit or withdrawal patterns," she explained. "This allows us to take proactive steps to address any potential threats."
From Static Checks to Dynamic Processes
The webinar highlighted how KYC practices have evolved from mere compliance checkboxes to dynamic tools that enhance both security and user experience.
"It's gone from being something that was very much a static identity check to something that's evolved over time into being a bit more dynamic," noted Kris Galloway, Head of iGaming Product at Sumsub. "The changes we've seen over the last decade have been revolutionary."
Fredrik Eggen, Director of Player Sustainability at Kindred Group, agreed. "The regulatory environment has changed; it imposes a lot more verification than it used to," he said. "Thankfully, technology has caught up. If we were still exclusively dealing with manual documents, it would have been a nightmare both operationally and for the customer."
Turning Compliance into Opportunity: A Dutch Case Study
Eggen shared an insightful case study on how regulatory requirements in the Netherlands were transformed into customer benefits.
"When the Netherlands re-regulated, there was a set of regulations around KYC," he explained. "Not only did you need to verify the customer's identity, but the first deposit had to come from a bank account—no other method—and that bank account had to be in the customer's name."
"We converted this into a practically frictionless solution where you get the name from the bank," Eggen continued. "If the details don't match what's registered, the deposit just fails."
The results were significant. "We saw circumventions of underage customers, self-excluded customers, customers who had hit a limit—really just drop off a cliff," he noted. "It improved customer satisfaction as well. It's one of these examples that shows how compliance can have some unexpected commercial and customer benefits."
The Arms Race Against Fraud
The panelists delved into the challenges of fraud prevention and how technology plays a crucial role in this ongoing battle.
Chris Galloway outlined a common fraud scheme involving rollbacks. "The fraudster uses stolen card details, deposits a large sum, and places bets with massively favorable odds," he said. "They withdraw the original value back to the account of origin and then withdraw the profits to another account."
Eggen emphasised the need for balance. "You're always going to have this fundamental question: How much user experience are you willing to sacrifice in order to prevent something like this from happening?" he asked.
AI and Biometrics: The Future of KYC
Artificial intelligence and biometric technologies emerged as pivotal tools in enhancing KYC procedures and fraud prevention.
"Since the technology exists, it's kind of a one-way solution for us to use it as well," Panagiotopoulou said, referring to AI-driven fraud attempts. "We've noticed people trying to use deep fake technology to fool our likeness checks or video verification—even for documents and passports."
Galloway stressed the potential of AI in fraud detection. "Likeness has so much more scope beyond just KYC," he stated. "It's something that can be triggered based on a number of different factors, whether it's the behavioural biometrics of the user or suspicious patterns of behaviour."
Panagiotopoulou added, "AI is quite good at detecting AI. So we also have this tool in our toolbox. The best way that teachers have used in the past to detect ChatGPT writing student essays is to ask ChatGPT if it was written by AI. It's very good at recognising when something's written by AI or not."
Eggen highlighted operational efficiencies gained through AI. "From an operational efficiency perspective, using AI to consolidate information picks out the relevant bits so you don't need to spend an hour scrolling through pages," he said.
Collaboration and Data Sharing: A Double-Edged Sword
The potential for data sharing among operators was discussed, revealing both opportunities and challenges.
"Data sharing among operators sounds very good in theory, but in practice, I have not seen it happen," Panagiotopoulou remarked. "We share data with the regulator, who is responsible for communicating any suspicions or information to the rest of the industry."
Galloway underscored the importance of open communication. "Having that level of communication with an operator is fundamental because a lot of people don't necessarily understand gaming and iGaming at the level which they need to," he said. "It's going to take something like AI to come along to really challenge that standard of not sharing data."
Conclusion: Toward a Safer Gambling Ecosystem
The webinar underscored the critical role of advanced technology in shaping the future of safer gambling and fraud prevention.
"While the key KYC principles are still in place, what has changed is the way that we're doing things," Panagiotopoulou summarized. "The fact that not everything's so manually done—we rely heavily on automations now rather than what we used to do 10 years ago."
Eggen echoed this sentiment. "You end up with a customer base where you can, at the very least, have some trust that it's that customer and that they live where they say they live," he said. "There is a de-risking element to it."
As the online gambling industry continues to evolve, integrating advanced technologies like AI and biometrics into KYC processes will be essential for staying ahead of emerging fraud tactics and ensuring robust player protection.
Watch the Full Webinar Below