Localisation and player trust fundamental for Brazil KYC, say industry experts

Localisation and trust are necessary components for a successful KYC process in Brazil, gambling industry experts revealed at SBC Summit Lisbon last week. 

Last week at SBC Summit Lisbon, a panel discussed the challenges of meeting stringent KYC rules, particularly in the newly regulated online gambling market of Brazil, where tough measures had hindered operator growth in the licensed sector’s early days. 

Esportes Gaming Brasil CBO Hugo Baungartner, Stake compliance director Barbara Teles and Betboom compliance counsel Laura Beatriz de Souza Morganti agreed that local KYC providers had been the most suitable option for gambling operators in Brazil, largely due to an increased trust and understanding of local players.  

“When we knew that we had to do the process of KYC in Brazil, I saw a movement of international companies and local companies trying to provide the solution for the operators,” Baungartner said.  

“What I’ve heard is the tools that are not Brazilian were kind of complicated to work with. In our operation, we use a Brazilian third-party solution, and of course, the ones that we trust. Not everybody is trustworthy.” 

Third-party aspect crucial in Brazil 

Teles agreed with Baungartner’s decision to opt for a third-party solution, saying such an important process should be left to experts outside of the business. 

“We are in the entertainment industry,” Teles explained. “We are not a KYC supplier. 

“Trusting third party KYC suppliers, especially in Brazil, it is a better solution than to provide it yourself. We don’t know yet a lot of things, because we only have been in the regulated market for nine months.” 

Morganti echoed the sentiment: “Our main service is the betting experience, so we have to focus on that. Delegating the difficult part and the very technical part seems to be a better solution.” 

Education vital to KYC success for gambling operators 

A major pain point for operators, especially in the first three months of regulation, was customer confusion over the importance of KYC. 

Pre-regulation, little information was required from bettors. But as of 1 January, players had to provide extensive personal information and facial recognition to operators.

Education among players has been crucial to ensure they understand the importance of KYC for their protection. 

“That’s something we all went through between December and January,” Baungartner continued. “From the first of January, they need to complete everything before making first deposit.  

“It was difficult, of course. We had big friction [points] in January. Everybody’s traffic went down. Month by month we communicated that they have to complete 100% of the KYC otherwise they cannot make [an account].” 

The education goes both ways, Morganti explained. 

“I think it was a good opportunity for everybody,” Morganti said. “Right now, we are educating [players], but we are being educated too, especially on what is the hardest thing for the client to do. 

“We also have to educate ourselves on making their lives easier. So this has been challenging, but this has been good because a lot of new tools are being discovered.” 

Staying one step ahead 

As to be expected, operators have needed to remain vigilant to prevent Brazilians from circumventing KYC requirements. 

“Brazilians are very creative,” Morganti added. “The KYC providers should anticipate what can happen, what they can do to [prevent] fraud, for example, a proof of age, a proof of likeness. We do have that in Brazil.” 

Operators will have to try and stay one step ahead of those looking for ways to bypass KYC, Teles believes. 

Teles has looked to other jurisdictions to learn from and collaborate on KYC, as well as Brazil’s incoming self-exclusion scheme, which is expected to be live by the end of 2025. 

“In Brazil every day we see a new challenge being assumed,” Teles concluded. “We have to be more creative. 

“We have an opportunity to learn from the other countries. We have an opportunity to develop new tools and everything. 

“If we can share [data on] the self-excluded [players], we can put all of the athletes together that cannot bet. If we put [that information] in the same database, everybody will be safer.” 

 KYC has proved one of the major pain points for operators in Brazil since the start of the regulated market.