Online Sports Betting: Steps to Comply with the Bank Secrecy Act
March 19, 2024
At a glance:
- The main takeaway: Online sports betting companies are considered financial institutions in the eyes of the federal government, so it’s essential for them to understand and operationalize the five pillars of BSA/AML compliance.
- Impact on your business: As more states start to legalize and regulate online sports betting, fraud and money-laundering crimes are expected to increase. It is important for these financial institutions to implement effective BSA/AML programs before operations begin.
- Next steps: Partner with Aprio’s AML experts to ensure regulatory compliance and implement internal controls designed to mitigate risk.
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The full story:
Have you seen more advertisements or heard friends chatting about online sports betting lately? The buzz around online sports betting reflects the market’s rapid growth. In the U.S. alone, online sports betting revenue will reach a staggering $9.65 billion this year and is projected to grow to $15.75 billion by 2028.
What’s behind the surge in online sports betting activity? And most importantly, what are the compliance requirements for companies that offer these services? To answer these questions, we need to start from square one:
Online sports betting’s evolution
Online sports betting exploded in popularity on the heels of a key U.S. Supreme Court ruling in 2018. The case in question — Murphy v. NCAA — was struck down in federal court, effectively allowing each state to make its own decision about legalizing sports betting.
Since the ruling, 38 U.S. states plus the District of Columbia have legalized sports betting. North Carolina recently became the newest state to follow suit, after passing legislation that took effect on March 11.
But sports betting apps and platforms aren’t free to operate without any compliance oversight. In fact, companies that offer sports betting services are categorized as financial institutions, which means they must comply with the Bank Secrecy Act (BSA) and relevant anti-money laundering (AML) regulations.
BSA/AML best practices for online sports betting
Like other financial institutions, online sports betting companies must comply with the BSA and follow the five pillars of AML compliance:
- Designate a compliance officer.
- Develop internal policies to effectively monitor for suspicious activity and ensure proper reporting.
- Create a training program to help your employees identify red flags.
- Ensure independent testing of your AML program.
- Identify and verify customers’ identities and conduct ongoing monitoring to identify suspicious transactions.
The more revenue generated by online sports betting companies, the greater the fraud and money-laundering risks. Establishing a strong compliance program and internal controls can go a long way toward protecting your business and customers against nefarious actors.
Partner with a professional team to achieve BSA/AML compliance
When it comes to regulatory compliance, you don’t want to leave your internal controls and processes to chance. Aprio’s Forensic Services team is comprised of AML specialists, forensic accountants, and expert witnesses who serve companies in every space, including financial institutions.
Our team partners with companies to develop internal training materials on BSA/AML compliance, in addition to determining essential policies and procedures. We can also conduct an independent assessment of your current AML program to see if it measures up and assist in reviewing any backlogs of transaction monitoring alerts.
Ultimately, Aprio’s goal is to help sports betting companies and other financial institutions reduce compliance risks and improve their operations to protect their organization, employees, and customers.
If you lead a sports betting organization and want an independent assessment of your BSA/AML program, schedule a consultation with our team today.
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About the Author
Haley Beatty
Haley Beatty is a forensic accounting and financial crime reporting expert. Her specialties include anti-money laundering (AML) and know your client (KYC) investigations and regulatory compliance. Haley has advised some of the world’s largest financial institutions and has led teams of up to 500 investigators. She works closely with clients to establish and advance AML compliance, monitoring, and reporting programs that exceed regulatory requirements. Haley has experience advising a broad spectrum of financial industry clients, from FinTech companies to MSBs and transaction processors.
Cristina Hazelwood
As a manager and consultant in Aprio’s Forensics Services practice, Cristina Hazelwood specializes in quantifying damages in fraud investigations and litigation disputes. Cristina has helped manage and delegate work in multi-million-dollar cases. She has extensive experience dealing with a wide range of financial crimes consulting matters, including anti-money laundering (AML) transaction lookback reviews and AML independent reviews.
