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Brazil prepares to implement new sports betting regulations

CAF launches biometric solution as Law 14,790 opens door to massive market
Brazil prepares to implement new sports betting regulations
 

Brazil’s Ministry of Finance has published an ordinance on the implementation of new regulations for sports betting, bringing the country another step closer to a regulated gambling industry that could open major opportunities for biometrics and digital identity providers. The Ministry of Finance will authorize providers under the new bill, which will ultimately be policed by a new National Gaming and Betting Secretariat. Among those considering the opportunity are national firms like CAF and Legitimuz, but also international providers like IDVerse and Sumsub.

CAF says local providers best positioned to ensure compliance, launches Bet ID

In a blog post for Brazilian facial recognition and identity verification firm CAF, Cadu Merlin, the firm’s VP of sales for Latin America, writes that interested parties will need to be up-to-date on compliance and have robust know your customer (KYC) protocols in place, as the country moves to enact Law 14,790 pertaining to fixed-odds betting. CAF has also introduced a packaged solution of software and services specifically to help sports betting businesses handle their Brazilian compliance obligations.

The new Bet ID from CAF packages its biometric facial authentication, ID document analysis and database checks for user onboarding and transactions.

“Before gambling firms set up shop in Brazil, they’ll need to have a firm grasp of the regulations as well the proper technology and processes in place for accurate identity authentication to enable a seamless customer experience while stopping fraud,” Merlin writes. In addition, customer experience must be considered: “Sportsbooks will need to deliver the seamless onboarding/registration process that online bettors have come to expect.”

Merlin says the regulatory plan will roll out in four stages, beginning with the publication of security guidelines. Stage two will address anti-money laundering (AML) processes and safeguards against financing terrorism. Stage three will detail technical requirements for betting operators. The rollout will culminate in June with a look at ethics, addressing social responsibility and responsible gaming practices.

Once the system is up and running, businesses will need to focus on quick onboarding, which means reliable technology that can match face biometrics against identity documents or relevant databases in real time. Services that make use of AI for document verification can make onboarding more efficient and reduce friction for the customer. At the same time, international businesses operating in Brazil will need to be aware of local consumer data privacy laws, and of people PEP (politically exposed persons) and restricted betting lists.

Of course, as with any major technological shift, there are those who will be looking to exploit Brazil’s regulated digital gaming industry for illegal profit. “Once a wave of new, regulated sports betting entities go live, there will come with it a massive rise of fraudsters committing bonus abuse, targeting good users with account takeover attacks, laundering money and much more,” says Merlin. He points out that a firm like CAF, which is Brazilian-owned and has offices in São  Paolo, Rio De Janeiro, and Venancio Aires, among others, has a potential leg up on global providers that would need to adapt to different national laws, making for easier scalability.

Bet ID makes use of CAF’s access to taxpayer registry CPF, as well as a database of athletes and their relatives to ease compliance with Brazil’s regulations.

CAF is also set to support GeoComply in bringing its KYC and AML product IDComply to the newly-opened industry.

IDVerse says face biometrics reduce risks associated with unique ID number

Unique to Brazil is the CPF, or Cadastro de Pessoas Físicas (Natural Persons Register), a unique numerical ID provided to every Brazilian. In a blog for IDVerse, the digital identity verification firm based in London, Sales Manager Martim Fortes says that while the number is a “cornerstone for verifying individuals,” it is also vulnerable to fraud attacks, specifically via fake CPF generators that are easily found online.

“Facial biometrics have therefore emerged as a powerful solution to combat this issue and ensure the authenticity of CPF verification,” says Fortes. “By linking facial images to CPF numbers in the register, we can establish a robust verification process that significantly reduces the risk of fraud and identity theft in the Brazilian gambling industry.” From initial verification to ongoing authentication, anti-spoofing measures and liveness detection, Fortes believes a system like the one IDVerse provides could go a long way to keeping the gambling industry safe, compliant and thriving. “With CPF and facial biometrics working hand in hand, Brazil can unlock the full potential of its burgeoning gambling industry while keeping identity thieves at bay.”

Sumsub and Legitimuz set to capitalize on transference of huge gray market

Unsurprisingly, identity verification providers have been preparing in anticipation of Law 14,790. Legitimuz is another Brazil-based firm touting its identity verification, facial recognition and anti-fraud tools for their strength and compliance, with a strict focus on KYC for iGaming. An article in Games Magazine Brasil examines Legitimuz’s BetSafe anti-fraud product, which operates passively to analyze a user’s IP address, fingerprint, and email for verification.

Sumsub has also weighed in on Law 14,790. Writing on the verification company’s blog, Head of iGaming Product Kris Galloway says the law will have a massive impact on a country that is as hungry for sports as Brazil, where gambling has been prohibited since 1940.

“Brazil has been one of the most lucrative gray markets for iGaming operators for a long time,” he writes. “Its appetite for gambling is insatiable, with an estimated 20 million Brazillians eagerly anteing up online.” However, he notes that the regulations are still not 100 percent clear on compliance requirements, and says Sumsub’s verification tools can help navigate ambiguity.

“Sumsub’s full-cycle verification and fraud prevention solution can certainly fulfill KYC/AML, CPF check, and fraud prevention, as well as ensure responsible gambling.”

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