In his latest column for Yogonet, iGaming industry consultant Ron Mendelson shares the key points that online operators need to be on the lookout for to avoid online gaming vulnerabilities including fraud, money laundering, and even theft. The expert provides an analysis of the various tools online operators can make use of in this booming sector, and the risks each of them may present.
The iGaming sector is booming, and while this is excellent news for operators, it does come with risks. Millions of players and billions of dollars flowing around online mean that it has become of interest to criminals and fraudsters looking to exploit the system.
Compliance measures are laid down by every licensing operator and national and regional authorities. These rules and processes that must be adhered to are designed to protect players and operators from exploitation. But what are the key risks facing the sector in 2022?
Prepaid cards A pre-paid card is issued by a pre-paid provider and has a monetary value stored on the card itself. It differs in this respect from cards issued by financial institutions and makes available money from the owner’s account.
The beauty of prepaid cards is they suit the unbanked or those that do not want to link their credit or debit card to the online world. As the money is stored on the card and not by a financial institution, it means there is no network access required at the point of sale.
They can, however, be used for money laundering as criminals can charge them with illicit funds and use them to place, layer, and integrate proceeds throughout the process. Gambling operators should be aware of the risks but also the level of anonymity that can be present with such cards. They should be cautious with account holders using multiple pre-paid cards on one account and then withdrawing to one card or a bank account.
Cryptocurrency Cryptocurrency has revolutionized the financial sector, whether banks want to admit it or not. Digital currencies in various forms are now even being used by giant financial institutions and central banks to transact.
But with crypto, there are risks. The technology provides users with a high level of anonymity or pseudonymity as due diligence is not typically carried out on those acquiring cryptocurrency. But this is starting to change. Rules rolled out by various governments and forthcoming ones from the European Union seek to require verification of identity before certain services are provided.
The risks are clear- if you cannot verify the identity of a user, trace where the money came from, or what it has been used for, the risk of money laundering is high. Gambling companies should be careful to verify the identities of all account holders at the onboarding stage but also periodically throughout the duration of the business relationship.
Account hijacking and takeover Account hijacking and takeover are one of the leading threats in the online sphere today. Account hijacking and takeover is where a legitimate account is breached and then transferred to another individual without the permission of the owner.
For example, a criminal could buy the login details of an innocent person on the dark web for a few dollars. This information could then be used to access the account and then change the password or linked email address. This would then give the criminal access to the account and allow them to carry out illegal activity, such as fraud, money laundering, and even theft.
Sadly, this kind of threat is authentic, and millions of people experience it every year. Operators should be on the lookout, but they should also encourage players to have unique passwords, change them frequently, and ensure they log out of the session when they are finished playing.
Money laundering Money laundering is a global phenomenon that sees trillions of dollars every year taken from the criminal underworld and funneled into the banking system and beyond. The proceeds of horrific crimes, including human and drug trafficking, corruption, and worse, are ‘cleaned’ by legitimate businesses, allowing them to be used by criminals or to be plowed back into crime.
The proceeds can also fund terrorism and conflict in developing and sensitive parts of the world. The fight against money laundering is serious; businesses are expected to take a range of measures to protect themselves and their customers from illicit funds. Penalties for not doing so can include big fines, license revocation, and criminal sentences. Prevention and the reporting of suspicious activity are key.
Underage gambling Underage gambling is when those under the legal age in a certain jurisdiction engage in gambling without the knowledge of the platform. This can be achieved in many ways, including using fake IDs, account takeover, and using the account of someone else with or without their permission. It is a growing problem with many youngsters worldwide gambling online regularly.
Access to smartphones and high-speed internet makes matters worse as it has become much easier for young people to get onto casinos and betting sites. Operators are expected to take a range of measures to prevent this kind of activity.
For example, requiring strict ID checks at the onboarding stage and periodically and also not placing advertising in places where young people are likely to see them. They should also look for suspicious activity and make access to gambling helplines and resources visible on their sites.
How to fight back Compliance is always a challenge, and with an ever-evolving landscape, it can be challenging for companies to stay on top of it. That’s why bringing in a professional to help you is always necessary. Fast Offshore has worked in the gambling sector since it started, and we are familiar with multiple jurisdictions and can assist with almost every corporate need.
From company incorporation to payments, licensing, and structuring, we have got you covered. We can also help with all matters relating to compliance, based on your situation and jurisdiction. To speak with a member of our team, contact us today.