Although it's not fair to generalize the entire sector, it’s clear that some betting operators choose to completely ignore this essential procedure, taking unnecessary risks and often challenging the law itself.
What Brazilian legislation says about KYC, AML, and facial recognition
Since leaving the Secretariat of Prizes and Betting (SPA) in April, Fred Justo — an expert in AML (Anti-Money Laundering) and integrity — has been analyzing the operations of various betting platforms to identify vulnerabilities and suggest solutions. From the moment of registration, it’s possible to find practices that violate current regulations.
Before diving into specific cases, it's important to highlight what Brazilian law mandates regarding the Know Your Customer (KYC) process:
Law No. 14,790/23
Article 23: Betting operators must adopt identification procedures capable of verifying the validity of the bettor’s identity, with mandatory use of facial identification and recognition technology.
§ 1: Operators must obtain, verify, and validate the authenticity of the bettor’s information, including cross-checking such data with public and private databases when necessary.
Ordinance SPA/MF 1,143/24
Article 15: Operators must adopt procedures that verify and validate user identity at the time of registration, without prejudice to additional authentication for placing bets or performing other actions within the platform.
Real problems identified in ‘Bets’ KYC processes
Through hands-on testing, Fred Justo discovered serious flaws in the KYC procedures of some operators. On one platform, for example, neither facial recognition nor bank account data was requested during registration. The screen offered a "continue without verifying" option, which could be freely selected.
In the next step, it was possible to deposit R$10 without any further verification. The same "continue without verifying" option appeared again. In other words, the operator received funds without knowing who the user was — leaving the door open to fraud and other risks. There's no certainty about who is on the other side of the screen.
Fred didn’t place bets or request withdrawals, but it’s likely that full KYC is only required at that stage — which violates Article 15 of Ordinance 1,143/24, which clearly demands identity verification during registration.
Allowing deposits without facial recognition is a serious failure, already observed on at least three platforms analyzed. Furthermore, registration without facial identification seems to have become common practice across many ‘Bets’, increasing the risk of fraud, financial crimes, and sanctions from the SPA.
The importance of quality KYC for operators and the market
For operators looking to protect their operations, Fred Justo highlights several reasons why quality KYC is essential:
Fraud Prevention
KYC enables verification of users' true identities, reducing the risk of fake accounts, stolen IDs, or identity mules.
Anti-Money Laundering (AML)
Betting platforms are often targeted in money laundering schemes. A strong KYC process helps monitor suspicious transactions and ensure funds come from legitimate sources.
Protection of minors
Verification prevents underage individuals from accessing betting platforms, ensuring compliance with legal age restrictions.
Transaction security
By confirming the bettor’s identity, operators protect both the platform and the user, ensuring funds are transferred correctly.
Legal compliance
Law No. 14,790/23 and Ordinance 1,143/24 require well-defined KYC procedures. Failure to comply can result in fines, sanctions, and reputational damage.
Improved user experience
Although it may seem like a barrier at first, a well-designed KYC process ensures a smoother user experience and avoids future complications or account blocks.
The guarantee of security
According to the expert, investing in strong KYC practices is essential for preserving market integrity, preventing fraud, and keeping operations legally compliant.
Knowing your customer well is not a detail: it’s a strategic priority for those who want to grow with safety and responsibility.
Betting companies that want to assess whether they comply with Ordinance 1,143/24 can consult specialized professionals. Fred Justo advises: consulting an expert makes all the difference in strengthening compliance, anticipating risks, and avoiding penalties.
Click here to get direct access to personalized service, with tailored solutions for each operation.
Source: Legitimuz
