How can PSPs assess AML risk when onboarding gambling merchants?

Payment Service Providers (PSPs) can assess AML risk when onboarding gambling merchants by using a risk-based, multi-layered due diligence framework at onboarding and beyond. Let’s look at what that includes.

Risk-based framework for assessing merchant suitability

Assessing Anti-Money Laundering (AML) risk requires more than a simple license check. You need a structured approach to identify vulnerabilities before a merchant enters your ecosystem. That includes:

• Verifying regulatory and licensing status. Confirm the merchant holds valid licenses in every jurisdiction where they operate, such as a UK Gambling Commission license or state-specific approvals in the US.
• Analysing the business model and product architecture. Examine how funds may move through the platform. Risks often stem from layered transactions where players deposit in one format and attempt to withdraw in another, which can obscure the audit trail.
• Determining beneficial ownership. Conduct deep corporate due diligence to identify ultimate beneficial owners (UBOs) and perform Know Your Customer's Customer (KYCC) checks where necessary.
• Evaluating the operator's internal AML program. Review their suspicious activity reporting (SAR) protocols, threshold reporting limits, and whether they have a designated Money Laundering Reporting Officer (MLRO).
• Assessing geographic risk. Check if the merchant accepts players from high-risk or sanctioned jurisdictions identified by the Financial Action Task Force (FATF).

Incoming challenges for payment processors and suppliers

The risk profile of a gambling merchant is never static because the methods used to move illicit funds evolve alongside payment technology.

As Mackenzie Schanke, Senior Analyst at Vixio, explains, anyone involved in software management or payment processing should be concerned about the rise of digital wallets, crypto, and instant payments. These technologies facilitate a circular movement of money that is increasingly difficult for operators and suppliers to trace.

For example, Mackenzie notes that while a cash deposit and withdrawal at a land-based casino is a simple one-to-one transaction, online play allows for layered transactions.

“If you're playing online and you're depositing with a digital wallet, but you are trying to withdraw in crypto, for example, this provides almost like a layered transaction... that the operator might have a hard time tracking the source of funds.”

Sophisticated groups often weaponise this audit trail disruption. For instance, players may deposit via credit card, engage in minimal play, and then request a withdrawal through a different banking channel or instant payment method to make illicit proceeds look like legitimate winnings.

Why it's important to stay up to date on global regulation

Manually tracking Anti-Money Laundering (AML) obligations across multiple gambling markets means scouring dozens of official sources and hoping nothing slips through the cracks. A single missed update in regulatory horizon scanning can leave your firm exposed to enforcement actions if you onboard a merchant that no longer meets specific jurisdictional standards.

Effective solutions for payments compliance involve more than just monitoring the news. You must understand how regulators are enforcing rules in real-time to properly weigh the risk of a potential gambling partner.

PSPs and gambling payment services are increasingly using RegTech platforms like Vixio to stay on top of rapidly evolving Anti-Money Laundering (AML) regulations. Our platform provides the regulatory intelligence and actionable insights you need to understand shifting enforcement trends and maintain a defensible compliance framework.

Assessing AML risk with Vixio

Vixio provides a centralised regulatory change management platform designed to help PSPs and gambling payment services assess and manage AML risk. With us, you can:

• Consolidate market oversight. Jurisdictional Reports offer a single source of truth for AML requirements, including due diligence standards and suspicious activity reporting across 200+ jurisdictions.
• Compare requirements side-by-side. The AML Comparative Overview Tool (AMLCOT) lets you identify where requirements diverge across US states and Canadian provinces to allocate resources efficiently.
• Access expert analysis. Beyond raw updates, Vixio provides deep-dive breakdowns of what regulatory shifts mean for your commercial operations and technical compliance.
• Monitor enforcement trends. The Quarterly Gambling Enforcement Report gives visibility into which regulators are cracking down and the specific violations they are targeting.

FAQs

What is the Bank Secrecy Act (BSA) in the US gambling context?

The BSA is the primary federal framework for AML in the US, mandating that casinos, card rooms, and tribal operations report suspicious activities and maintain high standards of customer due diligence.

How does "transaction laundering" affect PSPs?

Transaction laundering occurs when a merchant processes payments for another unauthorised business, often a high-risk gambling entity, through their own account to bypass PSP risk filters.

What is the role of source-linked intelligence in an AML audit?

Source-linked intelligence ensures every compliance decision is tied directly to primary legislation or regulator guidance, providing a defensible audit trail for internal and external reviews.

Why is the "three jurisdiction" tipping point important for PSPs?

Manual monitoring is often manageable for one or two countries, but at three jurisdictions, the differences in language, format, and re