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Customer Due Diligence in Gaming – Ensuring Secure Gaming Experiences

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Modern gaming platforms and techniques have mesmerized all online players across the globe. The application of digital methods means many positive and negative things. The digital platforms have security loopholes that fraudsters can use to their advantage. For instance, shortcomings in the payment methods. Hackers can exploit them to gain financial rewards for their malicious objectives. This has alarmed the global watchdogs and they want to strengthen the regulations as well as emphasize the social responsibilities of the gaming service providers. These steps are critical to safeguarding the financial growth of the gaming industry which is around $100 billion. The application of customer due diligence in gaming industry can protect it from external cyber-attacks. 

Customer Due Diligence in Gaming and the Pattern of Financial Crimes

The rise of innovative technologies shows that the gaming sector will flourish in various ways and hackers will want to take advantage of the shortcomings in the digital platforms. This raises major concerns regarding gaming security for gaming service providers, global regulatory bodies as well as individual players. 

There are various factors that can give rise to money laundering cases or other financial crimes. For instance, virtual onboarding procedures, valuable game items that also have real-world worth, and other special artefacts (healing portions, and daggers). 

Customer Due Diligence and Micro-transactions

Additionally, there are some players that trade in the games using digital currencies i.e. crypto. They engage in micro-transactions that are available in free-to-play games. For instance, games like Entropia Universe allow micro-transactions. There are some companies that even have gambling-style exchanges where players can trade with chips and loot boxes. They even have encryption on them so that only the buyer can see the content. Customer Due diligence in gaming will demand necessary customer data to mitigate the risks.

The Consequences of Dysregulation in the Instant Gaming Verification System – A Report from Sixgill

At this point, gaming service providers and players do not have clear guidelines on how to discourage or report criminal activities on the gaming platforms. In this context, cybercriminals can use this to hide their illicit money. As per Sixgill, a cybersecurity firm, money launderers were trading in loot boxes using stolen debit cards. Moreover, they were using the dark web as well as social media platforms to sell them. 

The Corporate Social Responsibility of Payment Service Providers

They were also using fabricated Apple IDs using an automated solution for debit cards. Later on, they sold them on third-party websites. This is where payment transaction companies can play a critical role in detecting suspicious activities. They can even collaborate with online gaming service providers to cross-check the data of players and find suspicious profiles. Then they can report them to global authorities and they will proceed with the legal procedure. 

Customer Due Diligence in Gaming and AML/CFT Regulations

Online gaming service providers are under immense pressure to deal with financial crimes from their platforms. The global regulatory bodies have made the regulations more stringent than before. They want to secure the gaming platforms as quickly as possible and as much as possible. Additionally, they have declared that digital financial transactions will be monitored under the AML/CFT guidelines. This was an announcement in Oct 2018 by FATF. It demands that companies work on gamers’ identity verification, supervise their behaviour, and report suspicious activities as per the regulations. This will be the true application of customer due diligence in gaming.

The Role of the Central Bank of Philipines – Why is there a Lack of Customer Due Diligence in Gaming?

The Central Bank of Philipines declared publicly that financial crimes are a risk in the whole gaming industry especially in the free-to-play games because money laundering and identity theft cases are rising exponentially. They said that the risk is prevalent because the online gaming industry is not well-regulated yet. Criminals can easily exploit these shortcomings and act upon their evil plans. 

Additionally, the bank stated that online gaming platforms are popular among the public even though they have shown compliance with the standards yet. Gaming platforms use token transactions which are not regulated by the KYC process so they have a free hand yet. 

Final Thoughts

Finally, it is critical that players all around the world follow the Identity verification procedure as well as the customer due diligence in gaming to reduce financial crimes. Cyberattacks have several negative consequences such as damage to market reputation as well as financial development. Nonetheless, advanced digital technologies like AI easily integrate with customer due diligence processes and AML monitoring systems. 

This is a big step towards fighting against the rising cases of money laundering, identity theft, and terrorism financing. The implementation of artificial intelligence approaches has advanced features that can keep track of players’ behaviours, detect habitual cheaters, and discourage fake account users. In this regard, the application of customer due diligence in gaming will also help deal with all the challenges proficiently.


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