The companies in the iGaming and online casino industries have a legal obligation to verify the customers’ identity along with their age, location, and source of funds. This is part of KYC compliance and it is highly important that the businesses in this particular industry adhere to this particular protocol.
These checks play a major role in helping with the identification of fraudulent activities such as money laundering and then prevent them. In addition to that, KYC compliance also ensures that gaming services are not being used by individuals who have intentions to carry out illegitimate activities.
But what happens if a business in the iGaming sector fails or doesn’t comply with the KYC process at all levels? To give you a better idea, this article will talk about the consequences of non-compliance with KYC regulations for businesses in the iGaming sector. So without further ado, let’s get right into it.
Financial Penalties
The most significant consequence that you would have to deal with the non-compliance with the KYC procedure is that you would have to pay the penalties on it. Any business that doesn’t comply with KYC regulations will have to face significant financial penalties from the regulators. There is no telling what the amount of the penalty would be as it will depend on the offense and the damage it caused. Nonetheless, it can go from anywhere from a few hundred to millions of dollars.
Financial penalties can wreak havoc on the iGaming companies’ finances. It can lead to significant financial losses and potentially even bankruptcy. Not only that, they might also face issues with their iGaming payment processing service provider because reliable names, such as Pay.cc, might not cater to them. So, in order to avoid any sort of fines or penalties from the regulators, it is highly important that iGaming business should adhere to KYC compliance.
Legal Actions
In addition to the financial penalties, another major consequence can be that the company might have to face some legal actions, such as lawsuits. These lawsuits can also include civil lawsuits or criminal charges, which will depend on the severity of the violation. Legal actions can drain the company’s resources significantly and can lead to potential issues in the long run.
You might spend a lot of your time and money fighting these lawsuits. Not only that, but the lawsuits can also hamper your reputation in the iGaming industry. This means that you might lose your customer base, which can further hamper your finances. Since iGaming and online gaming come under the umbrella of the high-risk payment processing industry, it can become challenging for you to find a payment processing company as well.
Loss of Reputation
As mentioned before, non-compliance to KYC can certainly lead to issues with your brand image and recognition. It would not be a good impression on your existing customers or potential ones that the company has to pay financial penalties or deal with lawsuits. This is something highly important as it would mean that your customers will have a hard time trusting your company.
Even your partners for iGaming payment processing might have a hard time trusting your business. They would believe that their reputation would also be at stake if they continued to work with you. It can lead to a loss in market share and further hamper your long-term growth. This is one of the major consequences that companies in the iGaming sector have to face if they don’t comply with the KYC regulations.
Increased Risk of Fraud and Financial Crime
Last but the most important consequence is that without proper KYC processes in place, there is a great risk as they can become the point for facilitating fraud and financial crime. Online casino and iGaming platforms see a wide range of transactions happening throughout the day. It can mean that your account can be used for different illegal activities, such as money laundering and terrorist financing.
This opens up the business to various legal and financial risks. In addition to that, it also can harm the financial system and society as a whole. Plus, it can also mean that the business can be sued by different parties. This puts the business in a challenging position and leads to issues that are mentioned in the above sections.
Final Words
Non-compliance with KYC can lead to a world of problems and have severe consequences for the business. This article clearly shows how it can become a major issue in the long run for your business. Therefore, it is important for businesses in the iGaming industry to comply with KYC regulations if they want to retain the trust of customers, regulators, and other partners such as iGaming payment gateway and processors.