FRAUD AND ID VERIFICATION : MARKET UPDATE
KYC IN THE DARK
Impersonation provides a very real threat to online gambling operators but in combatting it they can answer more readily to regulator concerns regarding responsible gambling . By James Baston Pitt , head of KYC at Onfido .
Playing ‘ guess who ’ was fun when we were kids . As igaming professionals , it ’ s a little more frustrating .
Unfortunately , that is exactly what some operators still find themselves doing . Though KYC and AML processes are gradually catching up to the digital experience , spotting instances of impersonation remains a sticking point .
As scrutiny from the regulators increases , creative anti-impersonation measures are becoming a necessity . But it ’ s not all bad news . For operators that accept the challenge , there are significant rewards to be reaped .
Regulation on the rise Recently , the trend towards a more closely regulated market has become apparent . Regulators are increasingly favouring stick over carrot , with AML4 and others placing the burden of responsibility squarely with operators . The message is clear : make compliance a priority – not just in theory , but in practice .
One area of focus is anti-impersonation . The need for it is clear ; users creating multiple accounts with stolen or borrowed IDs have a variety of negative repercussions , as those multiple identities collaborate with each other . The same person could manipulate odds by placing bets from multiple identities , for instance , or see all the players ’ cards in a game . There is also the issue of bonus abuse .
It is rumoured the Malta Gaming Authority will soon make thorough anti-impersonation measures a necessity in order to neutralise these problems . The exact details on what will be required remain unsettled . What is certain , though , is that igaming will need to get creative to keep up .
New responsibilities The push for tighter anti-impersonation measures is also being driven by the industry-wide focus on responsible gambling . Self-exclusion measures are now a requirement for operators across most of Europe . While current guidelines ask players to police themselves , they also require operators to put “ reasonable arrangements ” in place to prevent them from gambling .
Exactly what those “ reasonable arguments ” are remains a thorny issue . An anonymous , online environment , self-exclusion is easy to circumvent . The primary problem is that players can simply go elsewhere , due to the current lack of a multi-operator selfexclusion scheme . But there are also the same difficulties the industry has been tackling for years – the ubiquity of shared and mobile devices mean tracking IP addresses is futile , and weak KYC could enable opted-out players to re-register under a different name .
Fighting fraud The issues might be familiar , but the renewed pressure from the regulators means that innovative ways are being sought to combat them .
Current anti-impersonation methods being trialled are focused on behavioural monitoring . But these processes can be complex and costly . It takes time to establish what constitutes suspicious behaviour , and recognise the patterns when they occur . Expensive human resource is also required to regularly recalibrate parameters and workflows as they evolve . The ongoing management costs alone can be prohibitive .
More interesting alternatives exist in the IDverification space . New developments in facial liveness testing are elevating the standard document and facial check to higher levels of fraud detection than previously attainable . But even newer technologies like eyeball tracking are insufficient , capable of being fooled by a print out of a photo with the eyes cut out .
To meet the higher expectation of fraud detection now being placed on operators , more sophisticated facial capture is needed . The best solutions track the ways in which different elements of the face interact and which rule out the possibility of using a print out . Challenger banks like Monzo and Monese ask users to perform a combination of actions , like speaking a unique phrase combined with an action . This layered approach is proving the most effective way to keep the bad actors out .
Thinking bigger Inevitably , these measures create a little more friction than behind-the-scenes behavioural monitoring . But the benefits are twofold : they meet the higher threshold of fraud detection measures , and help operators comply with the anti-impersonation requirements that look likely to be introduced .
The regulators are clear they expect to see innovation applied across of the industry , not just to revenue-driving activities . With these more sophisticated anti-impersonation technologies , that is now possible . Indeed , compliance and responsible gambling could become a value proposition rather than a cost centre to for the early adopters . Operators would be wise to accept the challenge being posed by the regulators : to keep ahead of competitors , they need to get ahead of the technological curve .
James Baston Pitt is head of KYC at Onfido . Prior to joining Onfido , James led sales at Red Gate Software , among other startups . Onfido builds trust in an online world by helping businesses digitally verify people ’ s identities . Using machine learning technology , Onfido validates a user ’ s identity document and compares it with their facial biometrics . The identity can then be cross-referenced against international credit and watchlist databases .
112 | iGamingBusiness | Issue 106 | September / October 2017