U.S. Treasury Grants AML Relief For Remote Registration

October 20, 2021
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Federal anti-money laundering rules should not require U.S. sports betting or online casino operators to verify a player’s identity by inspecting a physical document upon opening an account, regulators have confirmed in a new ruling.

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Federal anti-money laundering (AML) rules should not require U.S. sports betting or online casino operators to verify a player’s identity by inspecting a physical document upon opening an account, regulators have confirmed in a new ruling.

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) on Tuesday published a “limited exceptive relief” for casinos from federal AML regulations to ensure operators “may utilize suitable non-documentary methods to verify the identity of online customers.”

Current federal regulations require all casino operators subject to the U.S. Bank Secrecy Act to examine a document in order to verify the name and address of patrons before they open or deposit into an account.

But FinCEN acknowledged the rule reflects the bygone era when legal sports betting was limited to Nevada and online gambling was generally not permitted under state or federal laws.

“The gaming industry has since evolved, with many casinos now offering new types of gaming, such as online sports wagering and online casino gambling, that involve remote interaction with customers,” the agency said in its ruling.

“FinCEN recognizes that the onboarding procedures for online customers used by many brick and mortar casinos, which may include non-documentary identity verification, can provide more comprehensive verification of an online patron’s identity than the procedures currently required under FinCEN rules.”

Only Nevada and Illinois among the 20 states with legal mobile sports betting requires physical in-person registration for accounts, although operators in remote-registration markets may still require documentation such as a scanned copy of a driver’s license in order to verify the patron’s identity.

How remote registration of online gambling accounts meshes with federal AML rules is also understood to have at least been a point of dialog between FinCEN and industry officials in the wake of the U.S. Supreme Court’s historic May 2018 ruling that opened the floodgates for legal sports wagering.

FinCEN said it had heard from “a number of stakeholders” expressing concern with its existing rule on account verification and seeking to demonstrate how third-party databases can be successfully used to validate a customer’s identity without further documentation.

“The AGA has long advocated for remote verification of IDs, and we are thankful that our recommendation was not only well-received, but approved by FinCEN,” American Gaming Association (AGA) senior director of government relations Alex Costello told VIXIO GamblingCompliance in an email following Tuesday’s memo.

“Today’s ruling will enable our members to extend their commitment to compliance to mobile platforms while continuing to seamlessly and responsibly service our patrons.”

In its ruling, FinCEN said relief from the need to inspect a physical document would apply only if casinos and other gaming operators adopt compliance measures similar to those already employed by banks, brokers and certain other financial institutions that are already eligible to fully verify customer accounts remotely.

Among other things, casinos will need to have a formal AML program establishing clear compliance procedures for when customer identification should be established with physical documentation, and when other appropriate sources will be used.

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