Crypto gambling AML-CFT compliance

Both crypto and gambling are considered fairly risky and sometimes even shady business areas in the eyes of international regulators. Besides, crypto gambling can quite often become a hotbed for money laundering and financial terrorism, especially with no control over players and the millions of transactions they make every day. This is why a crypto casino that does not abide by the AML-CFT compliance requirements is not a good look. In order to obtain a license the future owner of a crypto casino must, among other things, pass the AML-CFT compliance check.

Whether you aim to license your crypto casino onshore or offshore, full AML-CFT compliance is required regardless of the regulator. The ultimate approach is to draft a complete AML compliance program, which will precisely outline the measures a company has implemented to prevent money laundering and financial terrorism. The program should be drafted in accordance with the licenser’s requirements: for instance, a European regulator will rely upon the 5AMLD, one of the EU’s AML directives which outlines the legal measures for combating money laundering associated with virtual assets.

KYC identification for clients of crypto casinos

In addition to the AML-CFT procedures, KYC/KYB checks are also indispensable parts of the compliance program. Within the due diligence process, regulators require casinos to conduct identity verification of their customers whenever they try to withdraw money from their account balance. Especially so when the withdrawal is processed from a crypto balance to a fiat wallet, online payment system, or bank card. Such conversion of crypto assets to fiat money is known as off-ramping, and regulators require applicants to identify their clients before approving off-ramp requests.

IT infrastructure and technical audit for crypto casinos

Cybersecurity is an indispensable part of any online casino, especially the one that involves crypto. Before applying for a license, one should establish the IT infrastructure of the future company and ensure the security of clients’ data and transactions on all levels. The security measures most often include different kinds of encryption technologies implemented within the website.

Proper technical setup and regular cybersecurity audits are obligatory requirements in most jurisdictions. On the flip side, the more secure an online casino is, the more trust it gains from potential players. Henceforth, properly integrating cybersecurity into a crypto gambling platform means killing two birds with one stone.

Transaction acceptance in crypto gambling platforms

A crypto casino can accept client transactions in two main ways: involving solely cryptocurrencies or both crypto and fiat currencies. If the latter is the case, then a casino provides what is called on-ramping and off-ramping services. On-ramping involves converting fiat money into crypto during the depositing process to further use crypto for bets in casino games. Conversely, off-ramping is the process of converting crypto from the account balance to fiat while withdrawing it to a bank account or a digital wallet.

From the legal perspective, the licensing conditions will be different for crypto-only casinos and casinos that provide on/off-ramping. Henceforth, it would be wise to trust a certified legal professional to analyze the proposed business models and define the best regulatory route for a particular project.

In addition, it is important to establish policies for both deposit and withdrawal transactions to exclude the possibility of money laundering and fraud. The policies must include, among other things, the limits on how much users can deposit and withdraw within different periods of time, usually daily, weekly, and monthly. The limits can vary depending on the payment method chosen by the client. It is remarkable that casinos impose no limits on crypto-only payments whatsoever since KYC and due diligence rules apply only to fiat-related transactions.

Custody of clients’ funds on crypto casino websites

The custody of clients’ funds is another important aspect that is partly associated with the transaction processes. Some casinos, especially the ones dealing with fiat currencies, will be custodial of their customers’ funds, keeping them in inbuilt virtual gambling accounts. Others, in turn, won’t hold custody over customers’ money since players will connect and use their wallets directly.

While thinking over the implementation of banking solutions within a crypto casino, one must decide in advance whether the platform will be custodial over its clients’ money or not. Depending on this, different regulatory and compliance procedures will apply in the licensing process.