Casinos for youWhile igaming operators seek new technologies for uncompromised KYC and AML audit trails, gambling regulators seem to raise the bar with legal requirements. Blockchain may be a viable and secure option for all stakeholders. Here’s why.
While regulators up the ante concerning security protocols, the Malta Gaming Association (MGA) recently showed their willingness to take no prisoners when enforcing KYC and AML regulations. And for good reason - Operators face millions in penalties if they find themselves guilty of falling short of these protocols.
According to industry experts, the undeniable answer to Know Your Customer processing lies in the blockchain. The belief is that this technology, which creates a decentralised network, collects the most secure and legitimate data.
Nick Hill, an expert in iGaming regulation, argues that MGA, UKGC, and other regulatory bodies show that more strenuous KYC and AML protocols are inevitable. Current processes already place severe strain on the resources of providers, and many believe their data to be compromised. The question is how can this technology help operators to stay on the right side of the law.
Integrity of Data
Traditional identity verification used in KYC and Anti-money Laundering (AML) processes includes burdensome and costly tasks, which sometimes incorporate manual processing. This becomes a problem with the reality of human error and fraud, not to mention regulators who constantly move the bar.
Somehow operators need to negate their liability and Dominic Duffy, nChain’s Director of Marketing and Director of Product & Solution Strategy points out that the integrity of the data must be trustworthy.
Research from nChain shows that 50% of industry leaders believe their audit trails are unreliable. Blockchain data opens the door to real-time recording of data and this technology allows for the incredibly secure, irreversible transfer of information.
So, how can blockchain revolutionise crucial KYC and AML procedures?
Betting on Blockchain
The nature of blockchain data processes allows it to not only record every transaction that happens but also to leave a trail of the transactions done. In other words, it is immutable. Another advantage is the decentralised network for blockchain. In conjunction with the immutable capturing, this means that blockchain audit trails are irrefutable.
Hill reckons that online platforms and developers need to see this as an answer to their prayers. This unified processing of information through blockchain allows operators and regulators to access records at their point of origin. It also eliminates the challenge of cross-border verifications, and they can use the same data many times. It eliminates time-consuming document processing and punters can get to what they came for – Gambling. Instead of wasting time on finding the necessary ID verification paperwork, they get to relax with some igaming.
All of this is great news for AML tracking, as the real-time recording and transfer of data make it possible to prevent money laundering. The algorithms pick up any suspicious activity immediately and shut down the transaction as soon as it detects it.
How Secure is This for Customers?
Blockchain-based digital identities and personal data are the most secure information processes out there. The data blocks that make up the chain are filled with nodes that are interconnected. Changing data on one block would immediately notify the peer network and hacking all the related nodes simultaneously is improbable.
Developers secure the decentralised ledger with cryptography, where each participant has their own private keys. Each transaction that is processed on the chain receives this digital signature. Any transaction process or change needs to be approved by the network of users. This minimises the exposure of sensitive information to the point where a breach is nearly impossible.
The Obvious Solution
The advantages are clear for information security on the blockchain. In short, operators can provide reliable information to regulators with irrefutable proof of their processes, whilst users can rest assured that their information is secure. The sooner regulators allow for decentralised blockchain KYC and AML networks, the better for all involved.
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