Five key points that will shape the future of compliance in iGaming

1. The iGaming industry has to work much harder than other industries when it comes to AML risk – and convincing gaming companies about the importance of AML is much more difficult than, say, the banking industry. 

That was a key message I delivered at this year’s SBC Summit North America. And it was one that was supported by many others – as we discussed the key drivers behind the future of the industry. “As entertainment companies, people are much less willing and much less comfortable sharing information with us,” explained Jonathan Fishner, Senior Director of Financial Crimes Compliance at FanDuel.

“It’s very easy to sell why we need transaction monitoring, or why we need KYC. But when you're talking to people who are not in banking, it's a lot harder to sell compliance testing or QAQC [quality assurance and quality control] as a function. 
“The committees that we need and the real nitty gritty bank-style compliance aspects can all be achieved – but a lot of hard work is required. Persuading our finance teams of the need for all of this can be extremely challenging.”

2. GenAI can be used as a force for good 

Lots of different kinds of institutions want to demonize GenAI, and in some cases fairly, as it can be a really dangerous tool. But most of the attacks that we are currently seeing don't actually use any generative AI tools at all. That’s really important to remember. 

There is, however, a real opportunity in how this technology can change detection mechanisms and make it easier, cheaper, faster and more effective to recognize patterns, monitor transactions in a continuous way and find and track down a true source of funds. 

Take for example anomaly detections and pattern recognitions – with these, humans have the advantage of context, but automation has the advantage of scale.

GenAI can draw patterns from seriously microscopic lenses in a way that humans might not be able to – and tie it all together very quickly. What’s more, with automation, it can put that knowledge into action in an instant.

3. Bodies need to understand ‘who’ igaming is 

Sean Topchi, Director of Business Development at Kinectify told the conference: “We've seen repeated statements from FinCEN – even in the past few weeks – saying that sports betting organizations and online gaming organizations don't technically fit into this definition of dually licensed casinos or card clubs, but that we may unwittingly be money transmitters. So, I think that if you're going to build an AML program, you may need to be prepared to start being viewed in a different lens, not just by FinCEN, but by the Treasury or even, as prosecutions happen, the DoJ.”

“But then as an industry, if we don't think we fall into this money transmission space, how do we get to a place where we’re understood from a bank secrecy point of view? 

“I know that for years, the AGA [American Gaming Association] has been calling for guidance around this. The work that they do is great, but it hasn't gotten us anywhere yet. 
“The more I talk to people, the more there's this question around updating the definition of who we are,” Topchi continues. “And if this doesn’t happen, we might get shoehorned into this area of money transmitters, which could blow up everything about our current AML programs now – especially with reference to transaction monitoring.”

4. There’s going to be a greater focus on evidence

In this space, having as much documentation as possible is going to become more and more important. 

“And by documentation, we don’t just mean pieces of paper – but software-based, tangible evidence that demonstrates that we did our due diligence and maybe even went beyond that,” Fishner told delegates. “It’ll also be necessary to show that we did everything that we could in our area of responsibility."

“What's tough about AML – specifically in this lens – is similar to what you see in software overall, which is that technology leads the legal frameworks. The actual technology and the actual innovation has to happen for the laws to be created and I think it's very similar with AML,” Fishner continued. “Take for example the fact that the US government, which is famously very good at making laws about software, can’t predict what's going to happen until it actually happens, and then it might take five or six years to actually catch up to it.”

5. iGaming has to take charge 

Arpita McGrath, Chief Compliance Officer, Sporttrade, believes that igaming has to be proactive with the rulemaking so that it can have more control around what direction it's going to go in. 

And Topchi agreed: “In fact, we don't actually have to wait for FinCEN to propose rulemaking,” he said. “The industry – anybody in the public, any trade association, any company, even regulators – could create a petition for rulemaking. And this would help shape and define our narrative a little more.”

“And yes, then it would be up to the federal registry and FinCEN who could continue to sit and not go through the rulemaking process, but then, at least as an industry, we've done our part. We’ve said, ‘Hey, we want regulation. We want appropriate regulation that understands the type of industry that we are.”