A 2005 study by McKinsey argues that compliance failures fall into one of the top five “deadly sins” of operational risk in terms of impact on shareholder value.  Two of the largest gaming operators in Australia are feeling this pain with AML investigations permeating the news and crippling operations, including the revocation of gaming licenses across multiple states of Australia’s largest gaming operator.  

As governments increase enforcement actions against the backdrop of staggering money laundering numbers globally, gaming organizations run the risk of coming into regulatory crosshairs if they do not build a strong compliance program appropriate to their size and complexity.  Equally important is the need for organizations to scale up new products and services and respond quickly to market demand in light of the gaming revolution occurring today with the introduction of iGaming and sports betting across the US and Canada. Compliance no longer has the luxury of a predictable gaming market and must quickly respond to business opportunities and help facilitate growth. 

For the past few decades compliance was a people-function, managed in labor-intensive ways with the assistance of software products that were rigid, outdated, retrofitted from other industries, and required most of the work to be completed outside of the software program in excel workbooks and manual processes. Technology advances over the past decade have enhanced gaming functions outside of compliance, leaving compliance departments lagging in efficiency and responsiveness. 

Modernizing the compliance technology vertical is an essential opportunity for all sizes and types of gaming operations – from tribal to commercial to interactive. Even non-regulated skill-based games and other traditionally unregulated forms of gaming are being pulled into the AML regime by way of banking and payment processor requirements. By modernizing compliance teams, smaller operations gain necessary capability and scalability with limited resources; while larger operations gain unprecedented efficiency, flexibility, visibility, and scalability. This allows compliance departments to manage their current needs more efficiently and spin up new services quickly with full compliance support. 

Benefits of Advances in AML Technology 

AML technology has significantly advanced in recent years with the introduction of secure cloud environments, real-time API technology, NoSQL databases, graph technology, machine learning, and a litany of other impactful technologies. These advances allow big data to be consumed, processed, and analyzed in milliseconds. Compliance officers should understand the benefits of this technology as well as the aspects of information security when evaluating AML technology tools. 

Secure Cloud Environments 

The evolution of cloud-based computing has revolutionized software capabilities while providing opportunities which meet SOC 2 compliance standards. The two leading companies that control Cloud Infrastructure are Amazon Web Services (AWS) and Microsoft Azure (Azure). In 2021, their combined market share was 51% of an estimated $130 billion market. These tech giants employ the best information security talent and heavily focus on providing cutting-edge security features and the most advanced computing capabilities. Therefore, housing your data in the cloud in one of these environments along with implementation is more secure than in-house or self-managed servers for even the largest and most sophisticated organizations. In this environment, third party audits are critical to ensure software and DevOps environments are architected to maintain the best security practices. SOC 2 Type 2 is the leading audit standard in the US.  

In addition to security advantages, cloud infrastructure enables software companies to push updates in real-time, connect APIs to add enhanced capabilities, horizontally and vertically scale across numerous servers to allow for quicker data processing, and evolve the software far beyond what can be accomplished with on-premise solutions. In addition to flexibility in scaling, redundancy and fail-over using multiple regions provides enhanced availability and security. Efficiency, flexibility, scalability, and security are all best achieved by utilizing secure cloud infrastructure like AWS and Azure. 

Big Data 

Modern software databases and architecture are well-equipped to handle big data. Modern database solutions, like Graph and NoSQL databases, can handle billions of data points with processing speeds in the milliseconds. Modern databases also provide flexibility in pulling and organizing data in evolving ways, as opposed to being stuck to rigid tables and complex queries. Current technology is more than capable of analyzing behavior in real-time among millions of casino players for fraud, suspicious activity, and fulfilling related compliance requirements with speed and flexibility. 

API Technology 

Application Programming Interface, or more widely known as APIs, provides numerous functional benefits to modern software platforms and applications. APIs allow developers to build more efficient and sophisticated internal systems to move internal data across the application in faster and more dynamic ways. Instead of having a monolithic software platform, the backend and front-end can be componentized and connected via APIs, allowing larger, more robust and dynamic applications. These architectures allow for feature isolation, ensuring changes do not affect other parts of the platform and provide for more stable and reliable software. They also allow data to be moved between the backend and frontend with more precision and efficiency, allowing more flexibility in the way the app is set-up and quicker response times. 

External data can also be imported into the application via APIs. This data can come from other systems in the gaming organization or external data providers. The enriching of data from external data providers can enhance the AML capabilities of the software platform. For example, instead of a suite of compliance tools for various aspects of compliance work, APIs allow the data to be brought together into a logical and efficient workflow. This is also true for data that is siloed in various casino systems. All the data can then be brought together and displayed in ways to improve visibility across an organization.  

Machine Learning 

Machine learning is now widely understood and accessible in modern software development and has wide applicability in AML software. Machine learning is well-suited for deep data analytics, especially in supporting the identification of suspicious activity in large transaction data sets. Supervised machine learning can be programmed by AML experts to identify known patterns that indicate suspicious activity, while unsupervised machine learning can go beyond the known universe of suspicious activity and identify new trends previously unknown to AML professionals. 

Beyond data processing, machine learning can automate workflows allowing analysts to evaluate and decide the results of work as opposed to gathering data and clicking through long workflows. In a well architected system, analysts could become the experts that audit and oversee machine learning processes as much of the workflows are automated and executed by the software. This ideal end-state takes time to achieve and must be designed and built in partnership with AML experts and seasoned technologists in order to calibrate the system correctly to achieve effective automation. 

How Kinectify Delivers Modern AML Capabilities 

Kinectify is a modern AML platform designed specifically for gaming. Kinectify’s vision is to incorporate all the compliance and risk management functions of a gaming organization into one platform. The current capabilities, as of FY2022, provides a holistic view of all players’ information, risk scoring, due diligence, transaction monitoring, case management, and government filings both in the US and Canada. The Canadian module is specifically designed to meet iGO, AGCO, and FINTRAC requirements while the US module is designed for BSA and FinCEN requirements.

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Future State of AML Capabilities 

The future state of gaming risk management is exciting. Modern software will continue to progress at a lightning pace, bringing fresh capabilities to gaming organizations. The revolution in compliance technology in the gaming space is at the forefront of this innovative environment, which will provide gaming compliance professionals options never before available.  

Kinectify is part of this story of compliance innovation. The future state of Kinectify includes providing cutting-edge technology across all compliance functions – from players to vendors to employees. Additionally, Kinectify delivers support functions to compliance departments, such as legal and regulatory information and operational risk assessments for the property. The entire compliance function is wrapped up into a single platform with workflows and capabilities previously unimagined.  

A large part of this future state includes deep data analytics. Organizations who leverage and commoditize their data will win, while organizations who do not leverage data will be left behind. This is also true in compliance. Trend information, behavior analysis, and predictive analytics will be key to saving player relationships and expanding services into higher risk areas such as virtual currency or blockchain technology. Kinectify leads the way in this case, providing information, analysis, and tools to enable gaming companies to accelerate business development plans and respond to market opportunities with sound compliance support and scalability.  

In addition to new capabilities, big data and trend information enables Kinectify to mature core features like transaction monitoring to reduce false positives and unnecessary analytics, saving the gaming industry thousands of ineffective labor hours. Organizations will finally have the flexibility and control they need to run a tailored compliance program that fits their needs and minimizes wasted resources. 

Process automation will further reduce wasted resources spent on long and tedious tasks and workflows. Kinectify, in partnership with clients, continues to refine and build out robust machine learning-based automation, allowing the system to do more of the information gathering, processing, and decision making while analysts step into the expert role of overseeing the technology, auditing the results, and handling extreme edge cases.  

Overall, software will continue to evolve, bringing fresh and exciting capabilities to gaming organizations. Kinectify is already on the forefront of this charge and laser focused on modernizing the gaming compliance vertical to help support and facilitate rapid growth in the industry. 

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About Kinectify

Kinectify is an AML risk management technology company serving gaming operators both in the US and Canada. Our modern AML platform seamlessly integrates all of the organization's data into a single view and workflow empowering gaming companies to efficiently manage risk across their enterprise. In addition, Kinectify's advisory services enhance gaming operators' capacity with industry experts who can design and test programs, meet compliance deadlines, and even provide outsource services for the day-to-day administration of compliance programs.

To learn more about Kinectify and book a demo, click here.

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