A site like Vulkan Vegas must have a know-your-customer, also known as the KYC process. It is a business process where you validate your user’s identity, the main purpose of which is to prevent money laundering and fraud. In this article, we will enumerate the different reasons why this degree of verification is important.
What Is KYC?
KYC is typically a banking process where the bank verifies the depositor’s or customer’s identity. The main objective is to weed out criminal elements. Banks do this through their in-house investigation or verification system, but most do it alongside government and third-party agencies.
The most common steps of KYC include:
- Providing a copy of a citizenship.
- Handing over copies of IDs, preferably an ID that the government issued.
- Submitting a photo.
Government documents are difficult to fake. This is why you as a company would be in a better position if you require this kind of document as a primary form of identity verification.
Some banks also require other non-government documents, such as employment certifications, housing contracts, and utility bills, such as gas and electricity, cable, internet, etc. Once all this information passes the validation, the bank can now proceed to open an account.
This process is now a standard in the betting and gambling industry. Why? This is because these companies also process financial transactions. For example, a spot betting company has to process a bet, so they have to ensure that the bettor is the actual cardholder.
Benefits of KYC
Here are the benefits of using a know-you-customer system in the betting industry.
1. Customer Segregation
With a KYC process, you can assess if the people who register on your website or service are high-risk, low-risk, or medium-risk. With this level of segregation, you can also take appropriate action.
Once you identify a high-risk customer, you can set up a system that will flag this customer’s activities. For example, if you find out that this person is likely a fraudster, you can set a limit to how much he can bet on your platform.
Without customer verification, you can’t categorize a customer, and you may get a surprise one day that the cards a customer used were stolen. Customer segregation also makes it possible to see which players make huge bets. You can keep these customers in a bracket, so you can easily pinpoint those who are likely committing fraud.
2. Compliance With Legal Requirements
KYC is a set of legal requirements that aims to prevent and catch money laundering activities. Many countries have this law, and they may come in different names. However, all these laws have something to do with fighting money laundering.
Why is there such a law? These laws exist because money laundering is what enables terrorist organizations to get financed. Money laundering is also the mechanism for fraud and other criminal activities.
Online transactions are highly susceptible to crime and fraud because the people who commit the crime are faceless. The only way to combat this is to get documents that can verify that they are who they say they are. Without a KYC process, governments can shut the betting business down. It would be easy to accuse the company of participating in laundering schemes. Without this model in place, it would be difficult to fight these accusations.
3. Properly Identify Customers
You must identify your customers to assess if they have ties to terrorist organizations or criminal factions. In this regard, it is up to the company to decide whether the customer will be accepted to do business with them or not.
In addition, identifying your customers allows you to know who you should transfer money to, or who to deduct it from. Mistakes happen in transactions, and it is inevitable. If you want to correct this mistake, you must ensure that you are misusing money for the right people.
4. Monitor Customer Activities
Finally, you can monitor customer activities if you know them. Once you’ve properly identified the customer and labelled them accordingly, you can analyze their betting habits. You can also find out where this customer’s funds are coming from.
Customers who suddenly wager a huge amount can be suspicious. Why? It is because it is a way to make money clean. Funds won from gambling make them legitimized. The KYC is your way to detect this and identify why the bet was made. From here, your assessment can help you decide if this customer is suspicious or not.
Verification or KYC is important to secure betting because it is the only way one can guarantee the identity of the bettor. The company will be able to put a gate that can stop criminal enterprises from using the betting company for their money laundering activities.