The Influence of AML and PEP Procedures on Online Casino Transparency and Security

The rise of online gaming has improved the gambling world in many ways, making it simpler and more popular. Unfortunately, this has also increased cases of money laundering and related crimes, drawing legal and regulatory concerns. Consequently, anti-money laundering (AML) and politically exposed persons (PEP) procedures were introduced to curb these criminal activities in online casinos.

The influence of AML and PEP procedures on online casino transparency and security, since inception, has brought forth mixed results. This we seek to analyze together with the challenges iGaming companies face in adhering to these laws. Ultimately, we will see if the regulations are enough to protect operators and players in the online gaming world.


Functions of AML and PEP in the gambling industry

AML and PEP are policies designed to prevent money laundering and terrorism financing in the betting and gambling industry. As this sector is associated with handling large amounts of money, it’s expected that large sums are usually transferred to another account quickly. However, money laundering and financial terrorists are using this opportunity to move significant amounts for criminal activities.

This crime is associated with physical and online casinos. Therefore, legislators and government regulatory bodies decided to create a regulation that will detect and apprehend launderers using gambling services for their illicit acts. The Financial Action Task Force (FATF), in 2009, revised its recommendations to further improve AML obligations for casinos. Consequently, FATF member countries have upgraded the regulatory landscape for bookmakers, casinos etc.

Implementing an appropriate AML program has become very important for compliance. Its aim is to prevent suspicious transactions from getting into the financial system. However, criminals are always on the move, devising new means to remain under the radar. As a result, an effective AML program must be able to handle new and sophisticated fraud attempts. Otherwise, businesses may expose themselves to financial, trust and reputational losses.

Fundamentals of AML and PEP procedures on online casinos

Online gambling companies operate within a complex regulatory environment created to mitigate the risks of money laundering and financial terrorism. The FATF’s risk-based approach admonishes online casinos to understand and manage their unique risks, tailoring AML and countering the financing of terrorism (CFT) measures to address these challenges effectively. The fourth anti-money laundering directive  (AMLD), applies to gambling services providers, mandating CDD (customer due diligence) for transactions of €2,000 or more and providing guidance on identifying and reporting any suspicious activities.

The FATF findings1 on the vulnerabilities of casinos and the gaming industry highlight the various techniques and methods used in financial crimes within the casino sector, which also applies to online platforms. Some of them include casino value instrument misuse, structuring and refining of transactions, manipulation of winnings and exploitation of casino accounts. It is crucial for online casino service providers to be aware of these tactics and implement effective monitoring, identification and preventive measures.

AML and PEP procedures serve as critical obstacles against the misuse of online casinos for money laundering and financing terrorism. The number one reason for the creation of regulatory frameworks is to verify customers’ identity, examine their risk levels and showcase their activities for any signs of fraud or money laundering. These regulations are not just about adhering to felony requirements, however, they additionally protecting gambling platforms and their users from financial crimes.

How AML and PEP procedures on online casinos enhance transparency and security

While we’ve discussed Know Your Customer (KYC2), AML and PEP procedures in the gambling sector, it’s fair to recognize that these regulations are beneficial in enhancing online casino transparency and security for both service providers and players:

  • Improvement in security: One of the obvious advantages of AML and PEP procedures is the fact that they provide more protection for both casinos and players. By verifying user identity, operators can significantly minimize the risk of fraud and other criminal activities.
  • Increased transparency in transactions: Thanks to AML and PEP procedures, casinos and players can experience transparency in recording all transactions and making the resolution of disputes easier.
  • Increased trust: By following the KYC, AML and PEP procedures, online casino players will feel more secure depositing their money. Likewise, the fear of users losing their money to fraud will be reduced significantly.
  • Improvement in user experience: It is through these regulations that casino owners can ensure that all players are legitimate. They can, then, use this to provide a better gaming experience, knowing that they’re free from the risks of being associated with fraudulent players.
  • Legal compliance benefits: It can be beneficial for online casino operators that adhere to AML and PEP procedures as it helps them operate legally. Similarly, it also helps them to avoid penalties that usually involve huge fines, and in the worst scenario, license revocation.
  • More enticing promotions and bonus offers: Casino operators who know their customers better can offer more and better-targeted promotions and bonuses. This can be beneficial for both the company and its users.

KYC requirements for online casinos

As part of the local AML regulations3, online casinos are obliged to conduct a KYC procedure. However, note that this requirement may differ from one jurisdiction to another, even though it usually includes the following rules:

  • Conducting customer identity verification of customers.
  • Verifying customers’ source of funds.
  • Comprehending the dynamics of customer connections.
  • Developing risk profiles and monitoring transactions.
  • Developing an effective AML program.
  • Reporting suspicious transactions, when needed.

There are a number of KYC and AML requirements for gaming companies around the world. It typically depends on the operator’s country and the location of the players who are allowed access to the casino or betting site. However, in general terms, they mostly include providing the iGaming operator with proof of identity, proof of age and proof of address.

Most countries incorporate guidance for online casinos and other gambling companies within their umbrella AML bills, which tend to be in conjunction with the United Nations Office on Drugs and Crime (UNODC) fight against money laundering. The relevant UNODC mandate is known as Anti-Money-Laundering/Countering the Financing of Terrorism (AML/CFT)4, incorporating “capacity building activities” that pertain to “both traditional and new methods of money laundering techniques and illegal financial flows” – including online casinos.

Best practices for online casinos

Gambling operators must adhere to laws and regulations aimed at preventing money laundering and terrorist financing (ML/FT). Online casinos are a vulnerable industry due to their high-risk nature, and they often commit unfortunate mistakes that may lead to huge fines. So, operators need to look for ways to avoid violating the AML and PEP regulations.

Let’s discuss some things casino companies and operators can do to safeguard themselves:

  • Advanced transaction monitoring implementation: Operators should utilize sophisticated algorithms and analytics for detecting suspicious transaction patterns. They’re digital tools that can help in doing this job, perfectly. Implementing this approach can help identify potential AML risks at the early stages.
  • Enhanced customer due diligence (CDD) procedures: Companies should implement thorough CDD processes to identify and verify customers. This will help them to monitor and understand their gaming patterns and behavior. It can be achieved by monitoring transactions and looking for signs of money laundering. Basically, CDD involves gathering information about customers (such as their name, age and address) and verifying it via a reliable source.
  • Collaboration with regulatory authorities: Online casino owners should create a working relationship with regulatory bodies by engaging in regular communication and cooperating to mitigate risks. There should also be an industry forum where stakeholders can discuss ways to stay ahead of criminals.
  • Utilizing advanced tech tools: Online gambling platforms can leverage the latest technology, including AI and blockchain, to improve transparency and security for their companies. With this, money launderers will find it challenging to carry out crimes using betting platforms.
  • Employee training: Owners should ensure that all employees are adequately trained in AML/CFT policies and procedures to enhance the overall effectiveness and efficiency of the risk-based approach. If your team is not aware of AML-related red flags, even by using the best automated prevention tools, your company won’t be safe.
  • Ongoing customer monitoring: It is through monitoring that gambling operators can understand their customer, their businesses, risk profiles, and in some cases, their sources of income. It’s important for owners to know their customers, as some fraudsters or money launderers may come in innocent at the registration stage but later reveal their true selves.



For years, the anti-money laundering (AML) and politically exposed person (PEP) procedures have protected operators and users of mobile gaming platforms5. While the regulations may seem strict, they are necessary to safeguard the economy, combat crime and create a healthy environment for bettors.

Therefore, owners and users of online betting platforms must continually adapt to the evolving ideas of regulatory requirements regarding money laundering and terrorist financing. Furthermore, online gambling service providers need to adopt a proactive, risk-based approach and leverage technological tools to combat these issues. This will not only help them comply with regulations but also contribute to the transparency and security of online casinos.

  1. Vulnerabilities of Casinos and Gaming Sector, written by Financial Action Task Force (FATF), published by
  2. KYC – Know Your Customer, written by Giuseppe Faraone, published by
  3. Key AML Topics, written by Financial Industry Regulatory Authority (FINRA), published by
  4. Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT), written by International Monetary Fund (IMF), published by
  5. A Guide to Betting on Mobile Devices, written by Adnan, published by

By adnan

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