Modern-day gaming sites and approaches have positively impacted all digital players across the world. The implementation of online techniques means a lot of positive and negative consequences. Online sites have security shortcomings that cybercriminals can exploit. For example, loopholes in the financial payment methods. criminals can take advantage of them to access financial benefits for their malicious goals. This has startled the global watchdogs because they want to upgrade the kyc  regulations. The objective is also to emphasize the Corporate Social Responsibilities (CSR) of the gaming industry. Such type of steps is crucial to protect the financial progress of the gaming platforms which is approximately $100 billion. Implementation of CDD checks in the gaming industry can safeguard it from external threats. 


CDD Checks and the History of Financial Fraud


The boost in technological innovation highlights that the gaming industry will progress in multiple ways and cybercriminals would want to exploit loopholes in online platforms. This raises big reservations regarding gaming industry security, global regulatory agencies, and genuine players. 


There are several factors that can increase money laundering cases or other financial fraud. For example, online onboarding process, high net worth game items having real-world worth, and other special relics (healing elixirs, and knives). 


Customer Due Diligence (CDD) and Micro-Transactions


Moreover, there are various players that trade in the games using online currencies i.e. bitcoin. They trade through micro-transactions that are easily available in free-to-play video games. For example, games like Entropia Universe enable players to perform micro-transactions. There are some industries that even allow gambling-style transactions where players can exchange chips and loot boxes. They even give encryption on items so that only genuine buyers can access the content. CDD checks will require necessary client data to reduce risks.


The Ramifications of Poor CDD Checks in the Gaming Industry


At this stage, video game service providers and players do not have clear standards on how to deter or report suspicious activities on gaming sites. In this situation, hackers can use this to hide their black money. According to Sixgill, a cyber safety firm, money launderers were exchanging loot boxes through stolen debit cards. Additionally, criminals were exploiting the dark web and social media sites to trade special items. 


The Corporate Social Responsibility (CSR) of Gaming Service Providers


Hackers can sell identities on third-party sites using fake Apple IDs. This is where payment transaction platforms can play a crucial role in discouraging suspicious activities. They can even cooperate with digital gaming service providers to cross-evaluate the information of players and detect suspicious profiles. Then they can report criminals to global agencies and they will move forward with the legal process. 

CDD Checks & AML/CFT Regulations

Digital gaming service providers are under huge pressure to tackle financial fraud from the platform. The global regulatory agencies have made the guidelines stricter than before. They want to protect the gaming sites as soon as possible. Moreover, they have announced that online financial exchanges will be screened under the AML/CFT standards. This was a declaration in Oct 2018 by Financial Action Task Force (FATF). It requires that industries work on players’ identity verification, monitor their actions, and report fraudulent activities. This will be the actual implementation of CDD checks.

The Contribution of the Central Bank of Philipines – Why is there a Lack of CDD Checks?

The Central Bank of Philipines announced publicly that financial fraud is a huge risk for the gaming industry especially in free-to-play video games because of rising money laundering and identity theft incidences. The bank staff said that the danger is more prevalent because the digital gaming platform is still poorly regulated. Hackers can conveniently take advantage of such loopholes.


Also Check: Biometric Recognition: Provide an Ultimate Protection Against Criminals


In addition to this, the bank announced that digital gaming sites are famous among the public although they haven’t adhered to compliances yet. Gaming sites employ token transactions which are not monitored by the KYC system.


The Bottom Line


All in all, it is crucial that players all around the globe opt for the Identity authentication process as well as the CDD checks to minimize financial fraud. Cyberheists have various repercussions for instance damage to the market image and financial progress. However, the latest digital technologies such as AI easily integrate with the CDD review process and AML screening services. 


This is a huge step forward in fighting against the rising cases of money laundering, identity fraud, and terrorism financing. The application of AI & ML technologies provides advanced features that can monitor players’ behaviors, highlight habitual scammers, and deter fake account users. In this situation, the implementation of CDD checks will facilitate dealing with all the obstacles powerfully. 


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