To protect and serve
Combating fraud, trends in source of funds checks, compliance recruitment trends +More
Good morning and welcome to Career Path, the first of Compliance+More’s monthly editions.
The aim of Career Path is to look in more detail at the trends in the compliance space and how they affect the working lives of those employed in the betting and gaming sector.
In this debut issue, C+M talks to fraud experts at GeoComply about the epidemic of fraudulent activity driven by the current economic environment, a rise in opportunistic scamming and the growth of the dark web.
Then we speak to Richard McCall, CEO at UK-based data intelligence firm Armalytix, about how the issue of affordability checks jump-started his company’s interest in the gambling sector.
Lastly, we talk to Paul Sculpher, partner at Gaming Recruitment Solutions, about the skill sets needed by compliance professionals.
He has his future in a British Steel.
The fight against fraud
Identifying current trends and emerging issues with some best-practice guidance from leading anti-fraud specialists.
Know your enemy: The febrile economic environment, rise in opportunistic scamming and the growth of a resilient fraud-as-a-service dark web supply chain has created a perfect storm of dangers for gambling operators to navigate, experts claim.
Being clued up on the threat landscape is the best way to protect a business from bad actors and criminal gangs, says Ryley Eakin, fraud analyst at fraud and risk solutions provider GeoComply.
“As more markets open up there are greater opportunities for fraudsters to claim things like sign up promotions or bonuses,” Eakin tells C+M.
“It has led to an explosion of fraud; we’ve seen it lift off in recent years.”
Bonus track: Operators are often at their most vulnerable at state launches or when entering a new market, says Eakin, because the bonuses and sign-up offers become a magnet for criminals.
“Fraudsters will open multiple accounts to take advantage of these offers, using stolen identities to do so,” she explains.
“We’ve seen cases where a single identity has tried to claim 50-100 bonus offers from an operator.”
Hostile takeover: Criminals are taking over established accounts, placing bets with the real owner’s payment details, then withdrawing to a third-party account through a service like PayPal or Venmo.
“In many cases, the login credentials are obtained through data breaches,” Eakin says.
“Fraudsters can also automate the process today, pushing through different user password combinations until they find one that works.”
Credential stuffing, as it’s known, can give access to countless accounts with minimal effort from the fraudster.
“We’ve seen account takeovers also branch out into things like collusion in the poker world, where two or more players are working together to get an unfair advantage, through things like chip dumping,” Eakin says.
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Bot deployment
Rise of the robots: Bots are increasingly being deployed to scrape table information and provide live recommendations on what to play, what the moving odds are, and other ways to cheat. “This is a real concern for the industry and it’s a huge problem in Europe, particularly, where online poker is more established than in the US,” Eakin says.
“There are publicly available solutions, freely downloadable, that can give a person the tools to cheat,” she adds.
“Bot detection will become paramount to make a business safe for players.”
“Word gets out, among both fraudsters and consumers, about certain brands, what to do, where to go and where to avoid.”
Chargebacks: ‘Friendly fraud’ chargebacks have plagued the sector for years, and they occur when someone claims they haven’t placed a losing wager. “It's a challenge because businesses obviously want to provide good service to legitimate customers, but they don’t want to pay back this kind of fraud,” Eakin says.
“Operators often find it difficult to navigate the process, or don’t think it is worth fighting, and a lot of it is down to ecommerce chargeback processes, which weren’t built with the iGaming sector in mind.”
Synth wave: On the horizon, synthetic identities will become a huge problem for gaming operators, says Simon Marchand, VP of risk at GeoComply, and are already impacting the banking sector.
“North America relies so heavily on credit bureaus to validate identity that it opens the door to a wide range of fraud,” he says.
“Fraudsters will manage a few hundred identities at once, and so when a new market opens and an operator is launching promotions, signing-up bonuses, hundreds of synthetic identities are working against them.”
Take a chance: Volatile economic environments also cause opportunistic fraud to spike, Marchand says, as people who have lost their jobs or have no other way to support their families get desperate.
How-to guides on abuse refund processes and other low-level fraud are widely available online to people who are not traditionally career criminals.
“We’ll see a lot of small fraud attempts and when it comes to managing volumes organizations are not very flexible, which makes it a challenge for compliance and fraud teams,” Marchand adds.
No silver bullet: The best defense, going beyond mere compliance, is to bring together as many data points as you can to stop a fraud attack, Marchand says. This involves verifying locations, devices and any software or other tools an individual may be using to cloak their identity.
“A large-scale attack or breach can negatively impact the brand and cause users to lose trust in you,” he says.
“You always want to be seen as a brand that takes fraud prevention and detection seriously.”
Tech in focus – Armalytix
Who, what, where, when: Armalytix is a UK-based data intelligence firm that enables businesses to conduct fast and effective source of funds, affordability and financial risk checks via Open Banking and other tools.
It was launched in 2019 by a founding team of ex-bankers including CEO Richard McCall, who earned his stripes managing the technology operations of some heavy hitters in finance.
Armalytix has come to the fore as operators search for an answer to the affordability checks problem.
What to know: The technology is an instant, plug-and-play product that gives operators a simple, non-intrusive method of taking customers through the necessary checks.
It combines Open Banking, which gives access to customer accounts and allows operators to streamline the analysis of transaction data, with questionnaires to provide the necessary checks and evidence.
The risk-insight system identifies potential red flags by looking for irregularities in patterns of regular incomings and outgoings, allowing for early intervention.
Right place, right time: Armalytix wasn’t originally conceived with the gambling industry in mind, but the issue of affordability checks has put it squarely in the spotlight. Betsmart were early to the party, partnering with Armalytix in March.
Large operators are also testing the technology.
“In anticipation of the White Paper, we are talking to gambling firms and piloting the best customer flows for the necessary checks,” McCall tells C+M.
Fraction too much friction: Affordability checks has been one of the most heavily lobbied and controversial aspects of the proposed UK reforms; the racing sector alone reckons forced checking of accounts and fallout when gamblers hit certain limits will cost the sport £40m. “Affordability is going to be a big thing,” McCall says.
“Clearly gambling firms understand there are cases where they have to check someone’s income or spending activity, they know it’s probably coming and fundamentally they do not want friction.”
“There is ticking the boxes to be compliant or there is actually understanding the risks of each customer.”
Small problems, big moves: Beyond the affordability matter, broader AML risks are also evolving, McCall says, which will force compliance professionals to think differently when it comes to performing due diligence on customers.
“Larger institutions have got good at checking larger sums of money, so money laundering is likely to come in smaller quantities,” he says.
“It used to be one big £50k deposit on a house. Now, we are seeing gangs use mules to place small bets on reasonably certain events.”
“It is most likely the size of the transactions involved in money laundering will come down, so the number of those transactions will have to go up. If there are more smaller transactions, they will be that much harder to stop.”
“We want to help the industry do things the right way, and we’re working to streamline it so the level of financial crime and personal harm, as well as the risks to gambling firms, comes down.”
Compliance recruitment trends
C+M talks to veteran recruiter Paul Sculpher of Gaming Recruitment Solutions.
Not so long ago, all the talk in both the online and online gambling worlds was around compliance in Europe, says Sculpher. “Everyone needed them, nobody had enough,” he says of the compliance roles he was trying to fill. While still a factor at senior levels, he suggests there has been a leveling off further down the ladder.
Post-pandemic, he says there has not been much change in the skill set that chief compliance officers (CCO) are looking for from new recruits. “It’s all going to come back to commerciality vs. risk tolerance,” he adds.
“At junior levels, diligence, attention to detail and an underlying will to dig a little deeper will serve anyone well.”
I walk the line: As for those at the CCO level, Sculpher says the ability that employers are always on the lookout for is being able to find the balance between commerciality and protecting the license and customers.
“That’s not easy, so your CCO needs not only to make sure their team is delivering the vision, but also to keep up to date with the state of the market, the legislator and competitors.”
Get-along-ability: He adds that the skills most valued are more general: “One of the best LinkedIn posts I’ve read was one saying ‘The best ability you can have is being easy to work with’, and I think there’s a lot of truth to that.”
“A bit of basic empathy, recognizing that not many of your colleagues have easy jobs or indeed easy lives, goes a long way.”
“Wouldn’t we all rather work with someone that was 100% human and 90% skilled, than a pain in the backside who could deliver slightly better results?”
More generally, Sculpher says a common mistake being made by companies right now is thinking they have better leverage than is actually the case when it comes to timelines. “Good people just aren’t going to suffer a four-stage/three-month recruitment process,” he says.
“That’s true in isolation, but also if they’re high-quality, in-demand candidates, they’re almost certainly talking to other potential employers.”
“It’s genuinely astounding dealing with clients who still exhibit elements of ‘They’d be lucky to work for us’.”
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Career moves
Gold watch: Julian Harris from Harris Hagan is retiring 20 years after founding the firm that bears his name. See the LinkedIn posts from colleagues Bahar Alaeddini and his fellow original founding partner John Hagan.
Soft2Bet has appointed ex-general council at SBTech David Yatom as their new GC, with responsibility for the platform providers legal, regulatory and compliance teams.
888 has appointed Ben Wright to head up the company’s ESG and sustainability division. He joins from Sky Betting & Gaming where he was ESG director.
Upcoming courses
iGaming Academy, MGA key function training, Apr 11, 13, 18, 19
iGaming Academy, operational fraud management, Apr 12 & 13.
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For sponsorship inquiries email scott@andmore.media.
