Know Your Customer (KYC)

The internet is a wonderful place, right? It’s filled with all the information and entertainment you could possibly want, at the click of a mouse. Thanks to online banking, you can buy anything you can imagine, you can access books, games, movies and more. And there’s the wonderful world of online casinos, where, any time of the day or night, you can participate in any game you’d ordinarily play in a bricks and mortar casino – from live dealer baccarat to a myriad of slots – even if you’re not dressed.

Unfortunately, there is also a dark side to this widespread access and the anonymity that the internet grants us so easily. Identity theft, money laundering and fraud are rife, especially in places where money is found. And where better to find money than online casinos?

This is why online casinos and other financial institutions that operate in South Africa have to comply with KYC, or know your customer, legislation.

What is KYC?

Know your customer is a series of guidelines and laws that govern how financial and non-financial institutions (including online casinos) conduct business with their customers. Its primary purpose is to be a tool to prevent money laundering, as well as other types of financial fraud.

What is money laundering?

Money laundering is a method used by criminals and other unscrupulous individuals to ‘clean’ money that has been illegally obtained. There are hundreds of ways to do this, and many of them involve identity theft.

What is identity theft?

Identity theft occurs when an individual, group of people or company with dubious integrity uses the personal identification information of another individual or group without their knowledge. This information is often used to access bank accounts, credit or debit card information, or other financial transactions. People have suffered devastating losses simply because someone knew their online banking password or was able to get their personal and financial information by underhand means.

How does KYC prevent money laundering and identity theft?

In South Africa, KYC is governed by the Financial Intelligence Centre Act 38 of 2001 (FICA). Anyone who has transacted using a bank account or bought a mobile device with a SIM card has encountered FICA and KYC before.

KYC comprises four key principles that each online casino has to adhere to:

  1. Customer acceptance policy
  2. Customer identification procedures
  3. Monitoring of transactions
  4. Risk management

By following procedures that enable them to accurately identify any person they are conducting financial transactions with – including deposits and withdrawals, allocation of bonuses and prizes, and any foreign exchange transaction – they can reduce identity theft and fraud. They also monitor the transactions for suspicious activity, like making large deposits and withdrawals without actual playing, and various other red flags, to reduce money laundering.

identity theft

Customer compliance with KYC and FICA

Some customers do find KYC and FICA requirements cumbersome and intrusive. However, avoiding KYC tends to be dodgy or even downright illegal, so it’s advisable that you always comply when divulging personal or financial information. KYC is as much for your protection as it is for the casino’s – it’s there to ensure your transactions are legal and fair, and that your identity remains secure.

More on KYC and online casinos

Many of the casinos featured in our reviews section use KYC to ensure safe, secure online gambling for all players. If you want to make sure your favourite casino complies with KYC, you can read our reviews here, or check out the relevant casino’s terms and conditions on their website.

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