Yoti Encourages Younger Industries to Take Proactive Steps to Guarantee KYC and AML Compliance

Yoti is advising businesses in relatively unregulated industries like online multiplayer gaming to improve their identity verification and crime prevention capabilities. The company noted that unregulated industries seldom stay unregulated for long, especially in industries that have been associated with money laundering and other forms of financial crime.

In that regard, Yoti stressed that fraudsters are increasingly turning their attentions to industries with laxer policies, largely because new laws have made it more difficult to launder funds through more traditional avenues like real estate, art dealers, and casinos. Instead, a criminal may use stolen funds to purchase an in-game currency in a popular online video game, and then sell that digital currency to another player in exchange for legitimate real world cash.

Such behavior is relatively easy to get away with because many financial regulations do not yet apply to online gaming or other, newer industries. As a result, those businesses are not performing the rigorous screenings that are now common in other sectors. However, that is likely to change in the near future. Eighteen percent of UK gamers have experienced fraud, and the UK’s Financial Action Task Force (FAFT) has already recommended that Anti-Money Laundering (AML) laws should be extended to close those loopholes.

With that in mind, Yoti is arguing that unregulated industries have an opportunity to act proactively, and to adopt strong Know Your Customer (KYC) and AML practices before they are legally obligated to do so. That will make it easier to adhere to the new laws once they do go into effect, since they will be familiar with the technology and will be less likely to trigger a fine for non-compliance.

Yoti, of course, is best known as a provider of digital identity technology, and pitched its own solution to businesses that want to conduct reliable KYC checks. Businesses can adjust their screening procedures based on the acceptable level of risk, and Yoti can help them verify people’s personal information, and check to see whether or not they are on any watchlists or have been linked to financial crimes in the past.

The company also offered a more general primer for businesses that may not be aware of KYC and AML best practices. It explained that a good KYC procedure needs to ensure that a customer’s identity is legitimate, figure out where their money is coming from, and evaluate the level of risk they present from a financial crime perspective. The business, meanwhile, should have a policy in place to trigger an enhanced screening in high-risk situations.

Like other onboarding solutions, Yoti’s platform ask users to take a photo of an ID and take a selfie to perform a biometric match. The company focused on laws in its native UK, though the same thinking is likely to lead to new AML regulations in other jurisdictions.

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October 29, 2021 – by Eric Weiss