Top 5 KYC in gaming pain points companies must overcome

Why innovation is the answer to KYC in gaming

Customer verification is an ongoing challenge for gaming companies – charged as they are delivering super smooth digital player interactions while also complying with strict know your customer (KYC) and global AML regulations. Across jurisdictions, gaming platforms  must:

• Verify the player's age to ensure that they are legally allowed to access the service
• Confirm if the player has placed themselves on a self-exclusion list
• Protect against money laundering and other financial crimes

It's a delicate balancing act: if the player onboarding process is too long, slow, or cumbersome, then compliance costs rack up and players will go elsewhere. 

If the process isn't secure, gaming platforms put players' data at risk and may become targets for financial crimes, such as laundering money, committing fraud, or facilitating data breaches and unauthorized transactions by criminals.

With the continuing rise of gaming, it is vital for industry operators to understand, implement, and enforce KYC processes and AML compliance – while also adhering to regulatory requirements such as age verification, Enhanced Due Diligence (EDD), and location/source of funds checks.

However, this requirement can deliver several pain points for gaming businesses.

Understanding KYC in the Gaming Industry

The gaming industry, both online and offline, has become a prime target for fraudulent activities such as money laundering and identity theft. This makes Know Your Customer (KYC) procedures an indispensable part of the industry’s regulatory framework. KYC in the gaming industry involves verifying the identity of customers, assessing their risk levels, and continuously monitoring their activities to prevent illicit actions.

Customer due diligence is a key component of these KYC procedures, ensuring that gaming companies thoroughly understand their customers' profiles and behaviors.

In the online gaming industry, KYC procedures are crucial for several reasons. They help prevent underage gambling, ensure compliance with anti-money laundering (AML) regulations, and protect customers from financial crime. Online gaming companies must implement robust KYC measures to verify the identity, age, and location of their customers, as well as monitor their transactions to detect any suspicious activity.

The importance of KYC in the gaming industry cannot be overstated. Not only it helps prevent financial crime but also ensures that gaming companies comply with regulatory requirements, maintain a secure gaming environment, and protect their customers’ personal and financial information. By doing so, gaming companies can build trust with their customers and enhance their reputation in a highly competitive market.

The gaming industry—both online and offline—faces heightened risks of fraud, money laundering, and identity theft. As such, KYC and CDD protocols are essential for ensuring compliance and protecting players. Read our dedicated article exploring the importance of KYC and CDD in AML compliance to prevent underage gambling, enforce regulations, and create a safer digital gaming experience.

KYC implementation challenges

Implementing effective KYC procedures in the gaming industry comes with its own set of challenges. One of the primary hurdles is balancing the need for robust security measures with the need for a seamless user experience. Gaming companies must ensure that their KYC procedures are efficient, accurate, and convenient for customers, while also preventing fraudulent activity.

Another significant challenge is the complexity of regulatory requirements. Gaming companies must comply with a range of regulations, including AML and KYC regulations, which can vary depending on the jurisdiction. Ensuring regulatory compliance can be time-consuming and costly, particularly for smaller gaming companies that may lack the resources of larger operators.

Additionally, gaming companies must contend with the risk of false positives, where legitimate customers are incorrectly identified as high-risk or fraudulent. This can result in reputational damage and financial losses for the gaming company. To overcome these challenges, gaming companies must invest in advanced technologies, such as artificial intelligence (AI) and machine learning (ML), to improve the efficiency and accuracy of their KYC procedures. They must also ensure that their KYC procedures are regularly reviewed and updated to reflect changes in regulatory requirements and emerging risks.

Consequences of non-compliance with KYC regulations

Non-compliance with KYC regulations can have severe consequences for online gaming companies and online casinos. Failure to implement effective KYC procedures can lead to financial penalties, reputational damage, and loss of customer trust. In extreme cases, non-compliance can result in the revocation of licenses and permits, ultimately forcing the business to cease operations.

The consequences of non-compliance can be far-reaching, affecting not only the gaming company but also its customers and the broader gaming industry. For instance, if a gaming company fails to prevent money laundering, it can lead to a loss of confidence in the industry as a whole, ultimately affecting the reputation of all gaming companies.

Moreover, non-compliance can also lead to legal action, including fines and penalties. In recent years, several high-profile cases have highlighted the importance of KYC compliance in the gaming industry. For example, in 2022, the UK-based Entain Group was fined £17 million (USD 21 million) for failures in social responsibility and Anti-Money Laundering (AML) failures.

To avoid these consequences, online gaming companies and online casinos must prioritize KYC compliance, implementing robust procedures to verify the identity, age, and financial information of users. This includes conducting ongoing monitoring of user activity, filing Suspicious Activity Reports (SARs) when necessary, and maintaining accurate records of customer transactions.

The top 5 KYC pain points:

1. Balancing compliance with user experience

Online gaming operators must ensure compliance with strict KYC and AML regulations, while maintaining a smooth and efficient user experience. A complex onboarding process can discourage players, risking business loss. Effective risk management is essential to balance these requirements and mitigate potential issues.

2. Risk of financial crimes and regulatory penalties

Gaming sites are prime targets for money laundering and other financial crimes. Failure to implement robust KYC processes can lead to significant fines, loss of operating licenses, and severe reputational damage, as evidenced by the A$450million fine imposed on an Australian gaming operator. Additionally, verifying the legal gambling age is crucial to prevent minors from accessing age-restricted gambling services.

3. Complexity and cost of compliance

The regulatory landscape for gaming companies is complex and varies across jurisdictions. Compliance requires significant resources and investment in systems capable of performing thorough identity verification, age verification, and continuous monitoring for suspicious activities.

4. Need for fast and accurate verification

Players expect quick and accurate verification processes. Traditional methods can be slow and error-prone, causing friction in the onboarding process. Advanced solutions like biometric verification and automated ID checks can streamline the process, but they require sophisticated technology and infrastructure. As online gaming and mobile apps become increasingly prevalent, the necessity for efficient KYC processes grows.

5. Maintaining security while enhancing user experience

Ensuring player data security while providing a seamless user experience is also challenging. Providers must adopt innovative solutions that offer high security, without adding unnecessary steps for the user. This includes real-time feedback, fewer verification steps, and leveraging advanced technologies such as biometric authentication to enhance both security and user satisfaction.

Best practices for overcoming KYC pain points in gambling platforms

Implementing effective KYC procedures can be a challenge for online gaming companies and online casinos. However, by following best practices, these pain points can be overcome, ensuring a secure and responsible gaming environment for all users.

Streamline the KYC process

Optimizing the Know Your Customer (KYC) process is critical for both compliance and customer satisfaction. A streamlined, user-friendly KYC flow not only reduces onboarding friction but also enhances trust and conversion rates. Leveraging advanced technologies—such as artificial intelligence (AI), machine learning (ML), and biometric verification—can dramatically accelerate the process while ensuring robust fraud prevention. This sentiment is echoed in the episode of the Veriff Voices podcast, where Carl Ela Mnon, COO at Grid Technologies, discusses how digital identity verification can be both seamless and secure. Carl highlights the importance of using innovative, no-code tools that empower compliance teams—without the need for heavy engineering resources. By integrating solutions like biometric checks and AI-powered fraud detection, businesses can onboard legitimate customers in seconds while filtering out fraudsters with precision.

Educate customers

Educating customers on the importance of the KYC process can help build trust and increase compliance. This can include providing clear and concise information on the KYC process and the benefits of compliance.

Conduct ongoing monitoring

KYC doesn’t stop after initial verification. Continuous monitoring of customer behavior helps detect and flag suspicious activity, enabling timely interventions and preventing financial crime such as money laundering or account takeovers. Learn more about our fraud prevention solutions.

Maintain accurate records

Record-keeping is essential for regulatory compliance. Keeping detailed logs of identity verifications, transaction histories, and risk assessments enables audits, improves reporting accuracy, and assists in case investigations.

Implement a risk-based approach

Not all customers pose the same level of risk. By adopting a risk-based model, you can dedicate more stringent checks to high-risk users while maintaining a smoother experience for low-risk ones—optimizing resource allocation and compliance effectiveness.

Use advanced technologies

Leverage tools like biometric identity verification, AI-powered fraud detection, and even blockchain for immutable record keeping. These technologies not only improve accuracy but also speed up the KYC process.

Provide multilingual support

Language should not be a barrier to verification. Offering global verification coverage in multiple languages ensures inclusivity and reduces the likelihood of drop-offs due to misunderstandings or frustration during onboarding.

Ensure mobile optimization

With most users accessing platforms via mobile devices, it’s crucial to have a seamless mobile-first identity verification experience. Optimizing for speed, clarity, and camera functionality can reduce friction and abandonment rates.

By following these best practices, online gaming companies and online casinos can overcome KYC pain points, ensuring a secure and responsible gaming environment for all users.

The future of KYC in gaming

The future of KYC in gaming is likely to be shaped by advances in technology, changes in regulatory requirements, and evolving customer expectations. One trend that is likely to continue is the use of AI and ML to improve the efficiency and accuracy of KYC procedures. These technologies can help gaming companies quickly identify and mitigate risks, ensuring a safer gaming environment for all players.

Regulatory technology is also playing a crucial role in transforming KYC processes, making them more efficient and compliant with evolving regulations.

Another trend is the increasing use of biometric identity verification, such as facial recognition and fingerprint scanning. These methods provide an additional layer of security and convenience for customers, making the verification process faster and more reliable.

Gaming companies are also likely to focus on improving the user experience by providing seamless and convenient KYC procedures that do not disrupt the gaming experience. This includes real-time feedback, fewer verification steps, and leveraging advanced technologies to enhance both security and user satisfaction.

In addition, there will be a greater emphasis on collaboration and information-sharing between gaming companies, regulators, and law enforcement agencies to prevent financial crime and protect customers. By working together, these stakeholders can create a more secure and trustworthy gaming landscape.

Overall, the future of KYC in gaming is likely to be characterized by increased use of technology, greater emphasis on customer experience, and closer collaboration between stakeholders to prevent financial crime and protect customers.

Streamlining player onboarding and fraud prevention in the gaming industry

Veriff supports gaming operators by simplifying and strengthening the identity verification process, helping them overcome regulatory challenges while enhancing the player experience. By verifying players on their first attempt, Veriff boosts conversion rates through a seamless and intuitive verification flow. The onboarding process is user-friendly and inclusive, allowing players to use any device or platform, whether iOS, Android, or web. Advanced AI and data extraction tools help reduce errors by pre-filling forms with verified data from official identity documents. Additionally, Veriff employs a layered approach that combines face, document, device, and network diagnostics with behavior analysis to detect and prevent sophisticated fraud tactics such as chip dumping, bonus abuse, and multi-accounting.

​​Veriff and Easygo/Stake: Delivering a high-confidence and friction-free way to onboard online players

Veriff partnered with Easygo’s Stake.com, one of the world’s leading crypto casinos and sports betting platforms, to enhance player safety and streamline user onboarding. With a global user base and strict compliance requirements, Stake.com needed a fast, secure, and scalable identity verification solution. Veriff provided an automated IDV process that helped Stake meet regulatory obligations while minimizing friction for users. As a result, Stake saw improved conversion rates, better fraud prevention, and a smoother user experience across key markets.