Risks and reforms for the Australian gambling industry

Australia's gambling industry, including?casinos?and online?betting, has been under intense scrutiny for some time but over the last three years regulators have intensified their investigations. Bart Puszko, Director of Lysis Group, Australian Operations stated that “Now is the time for the gambling industry to lift their game when it comes to adopting and embedding anti-money laundering (AML) and?Counter Terrorism Financing (CTF)?controls to prevent financial crime.”

Credible media sources reported serious money laundering-related activities from prominent casino groups such as the?Crown Resorts Limited which was?ordered to pay?a fine of AUD $120 million for?facilitating money laundering and partnering with operators that had links to organised crime. Another large casino group in Australia,?Star Entertainment Group has also been found unfit to carry a casino licence in Sydney due to “systematic governance, risk and cultural failures.”

More recently,?The Australian Transaction Reports and Analysis Centre (AUSTRAC),?Australia’s financial crime watchdog, has ordered investigations into Sportsbet and Bet365, specifically around their lack of compliance with financial crime laws.??

Security and convenience are top of mind

Cybercrime has escalated excessively in recent years and compounds the risks linked to financial crime even further since these crimes are committed solely for the purpose of illegal economic gain. In Australia, a major data breach occurred during 2022 at the country’s second largest mobile telecommunications company, Optus, where personal data of 9.8 million current and former customers were accessed. Bart remarked that “In light of these breaches happening more frequently across the globe, firms and customers alike, are looking for more secure ways to protect personal information hence, automation and artificial intelligence can go a long way to minimise the chances of information being stolen and at the same time, limit the flow of illicit funds”.

Open banking is one way to mitigate the risks linked to the unlawful accessing of customer information as it automates the on-boarding process and reduces possible friction points. Open banking can also become a powerful marketing tool for firms because it increases security and provides customers with peace of mind that their personal information is obtained and stored in a more secure manner.?

Furthermore, open banking enables secure collaboration in the banking sector and allows third-party payment services, and other related financial service providers, to gain access to customer’s banking transactions from financial institutions. Authorised third parties can then access the customer data to confirm information and track information such as sources of income as either being legitimate or illegitimate. This also removes the barrier for firms, including gambling firms, having to ask their customers for ‘source of funds’ information and fast-track the streamlining of the on-boarding process.?

The process of streamlining customer on-boarding and the reduction of friction points, especially when focussing on the sources of income of potential high-net worth clients, seems to be one of the biggest challenges for the gambling industry in Australia and for other regulated firms on a global scale. This could be due to the fact that customers are sometimes reluctant to reveal their sources of income and wealth, and to obtain this from customers via a manual process could be a lengthy, frustrating and inefficient process. Open banking can therefore offer a faster, paperless, saver and?more positive customer experience and pinpoint the possible flow of illicit funds.

Bart added that “Third parties?are authorised by global regulators such as the Financial Conduct Authority (FCA) to seek and obtain account holders’ permission to access and analyse bank account transactions, which is why it adds to security, customers’ peace of mind and can plays a major role in financial crime prevention.”

In fact, credible statistics indicate that?10.6% of the UK’s banked population is now using open banking and adoption rates have accelerating rapidly to have 15% of its banked population using open banking in 2023. On a global scale, the open banking market size is expected to reach $135.17 billion by 2030.

Partner with solution-driven experts

In closing remarks, Bart emphasised that to partner with financial crime compliance experts such as Lysis, which offers specialised expertise and is at the forefront of new technological and regulatory developments, on a global scale, can ensure that the gambling industry remains compliant and at the same time, unlock substantial business value in the long-term.

Lysis can also help firms to improve the integration of data which results in more effective Know Your Customer (KYC) processes by?applying a unique and cost-effective four-stage process for initiating, running, and completing transaction monitoring remediation effectively; something that the gambling industry is in desperate need of.