According to the Ministry of Finance, the sector moved over R$ 120 billion (US$21.75bn) in 2023, and expectations are that this number will surpass R$ 150 billion (US$27.2bn) by the end of 2025.
Therefore, for the long-term sustainability of the industry, security and compliance are essential factors. One of the most important mechanisms to ensure both is KYC, short for Know Your Customer. More than a bureaucratic requirement, it is the foundation for safe, responsible, and legal operations.
What is KYC?
KYC is the process of verifying the identity of users on a platform and involves collecting and analyzing data such as:
* Full name and date of birth
* Identity documents (ID card, driver's license, or passport)
* Proof of address
* Selfie with a document for biometric validation
In addition to identity validation, KYC allows for tracking the source of funds, identifying fraud, preventing financial crimes, and blocking underage users from gambling.
Why is KYC essential for iGaming in Brazil?
The new Brazilian legislation on betting and online gaming, which came into effect on January 1, 2025, imposes strict obligations related to anti-money laundering and consumer protection.
According to Normative Ordinance MF No. 827/2024, operators must verify every bettor’s identity, validate documents, and maintain up-to-date records. Non-compliance can result in fines of up to R$ 2 million (US$365,000) per violation and the revocation of the operating license.
Furthermore, KYC is critical for:
Preventing fraud
According to TransUnion's Global Online Fraud Report, Brazil ranks among the top five countries with the highest number of fraud attempts on betting platforms, with a 19% increase in digital fraud attempts in the sector between 2022 and 2023. Common frauds include:
* Creating accounts with fake documents
* Bonus abuse using multiple identities
* Transactions with cloned cards
According to iGaming Business, platforms with automated KYC processes have reduced this type of fraud by up to 80%.
Preventing money laundering
Brazil is on the watchlist of the Financial Action Task Force (FATF) regarding anti-money laundering. As regulation advances, authorities require operators to implement robust identity verification and suspicious behavior monitoring tools. KYC is the first filter to prevent iGaming from being used as a channel for money laundering.
According to the 2023 report by Coaf, more than R$ 5.7 billion (US$1.05bn) in suspicious transactions were detected on digital gaming platforms. A significant portion involved users without proper identity verification.
Promoting Responsible Gambling
As the market grows, so does concern over gambling addiction. According to a 2023 study by FGV, approximately 3% of Brazilian gamblers show signs of compulsive behavior. KYC helps mitigate this issue by:
* Monitoring players’ age and blocking underage users
* Detecting risky behavioral patterns
* Enabling the setup of betting and usage limits
* Supporting the implementation of self-exclusion tools
Operators that implement responsible gaming programs and integrated KYC systems report fewer complaints and higher user retention.
Risks of not implementing KYC in Brazil
Neglecting KYC can lead to:
* Fines of up to 2% of gross annual revenue, as stipulated by gambling regulations
* Suspension or revocation of the federal license
* Criminal investigations for potential facilitation of money laundering
* Loss of market and public trust
Additionally, platforms without KYC can be judicially blocked and have their domains removed from the internet, as seen in Federal Police actions against unregulated sites.
KYC, reputation, and platform longevity
In Brazil, reputation is essential for iGaming platforms. According to a 2024 Gaming Tech Insights survey, companies that invest in security and transparency - including clear identity verification processes—receive up to 70% more positive reviews on sites like Reclame Aqui and Trustpilot.
Moreover, a Datafolha survey conducted in early 2024 revealed that over 60% of Brazilian bettors trust platforms more when identity verification is required.
The importance of choosing a software provider with integrated KYC
With Brazil’s iGaming sector now regulated, choosing a software provider with built-in KYC solutions can be the difference between operating legally and constantly facing risks. Key features to look for include:
* Automated document verification using OCR and AI
* Facial recognition and biometrics to prevent fraud
* Integration with official Brazilian databases (e.g., Receita Federal and Serasa)
* Support for the LGPD (General Data Protection Law)
* Monitoring dashboard with real-time alerts
Choose inplaySoft
inplaySoft is an international iGaming software provider with significant experience in the Brazilian market. For the company, security is fundamental, that’s why we provide KYC and AML tools to ensure protection for everyone involved, from our iGaming operator clients to their players.
Click here to learn more about inplaySoft or contact us at [email protected].
Source: inplaySoft
