A huge win at an online casino would make anybody's heart beat faster! Imagine you hit the jackpot, a life-changing win, and you couldn’t be happier. But then you suddenly get taken out of your dreams with the discovery that the casino will only pay out your winnings if you can provide precise evidence about the origins of the money you wagered. This is not uncommon but not a lot of players are aware that online casinos might request such documents to be compliant.
It is quite common for customers to have to provide detailed evidence of the origins of their money exactly when they either make a profit or want to continue playing after a few successful rounds. In order to prevent fraud and money laundering, however, casinos are required by law to request that their players provide evidence of where their funds came from. If casinos do not do this, they are effectively risking their license to operate a gaming server for online gambling.
Therefore, the so-called “Source of Funds Verification'', or SOF in short, is usually carried out if an individual deposits or withdraws large sums of money.
Why Your Casino Is Asking For Proof of Income
It is easy to understand why it annoys many customers when their online casino, instead of paying out the winnings they hoped for, first demands proof of their funds' origin. Customers who fit into the corresponding scheme will receive an email from their online casino asking them to prove this information in full. They could register and play completely unhindered for months or even years. Why, then, do these customers ask, do I have to provide this evidence right now?
As already mentioned, casinos usually wait until a player makes a bigger profit or meets certain criteria or payment thresholds. Customers who do not win anything or for whom gambling is only an occasional pastime often get a huge shock when they suddenly get asked to provide information about their financial situation. This group may even decide to stop playing altogether or else switch to another online casino.
The truth is, though, that the online casino is well within their legal rights to demand such documents from their customers when large sums of money are changing hands. It’s not just their right to do so – it is also an obligation. This is a part of the license agreement that the operator has with the regulator. In this way, they want to make sure that only legitimate funds are used for gambling and that these come from legal sources. Furthermore, the source of funds verification is supposed to prevent money laundering and the financing of terrorism. We’ll explain more about this later on but let’s first have a look at the process…
What SOF Documents Are Required?
The receipts that customers have to show for a source of funds verification can be very different. It depends on several factors, but the most common ones are as follows:
- Income statements, as well as proof of dividends and pensions
- Current and savings account statements showing that any increase in value came from a trusted source
- A trust deed that proves the legitimate claim to fund shares
- A bank statement for profits from company shares
- A dated proof-of-payments document from customers
- Any documentation that proves the solvency of the player
In case you have to verify the source of your funds, the casino will contact you with detailed instructions about what exactly is required in your case. Most players have no problem with the process at all, as these types of documents are usually easily available to most people. Please keep in mind that it can take up to a week to verify the validity of the documents. If it takes significantly longer, we suggest contacting customer support just to be sure that everything is on the right track.
What if the Casino Doesn’t Want to Accept My Documents?
There are some casinos for which a single verification is not enough, and once successful, they ask for more and more documents from their players. Time and again, customers report that their emails are constantly being ignored even though they have submitted enough receipts. Others had to listen to unfriendly and vague excuses in the live chat. Some casinos pretend to "check" the customer account and then simply no longer respond to queries.
In the meantime, there are even reports that some online casinos rejected their customers' financial records as untrustworthy and simply close the account in question. In this way, the supposed profits vanished into thin air. The corresponding bets were refunded to the customers, but the actual profit was lost forever.
Rest assured that if you are playing in an online casino licensed under a trustworthy jurisdiction, that there’s nothing to worry about, as long as your funds come from legitimate sources. If you feel like the operator is treating you unfairly, you can always file a complaint with the regulator.
For that reason, we always recommend playing at trustworthy online casinos that follow the law and are properly licensed. The vast majority of complaints when it comes to rejected source of funds documents stem from dodgy operators without a sufficient gambling license.
Your Personal Data
Most online casinos take data protection very seriously and use the requested SOF and KYC documents merely for verification purposes. However, customers should only provide their chosen casino with essential information and only what is necessary. In this way, all irrelevant information, such as addresses or payments, can be blackened out on an account statement. An online casino should actually be satisfied with a copy of the tax return and no longer require any further receipts.
If casinos repeatedly follow up, it is very possible that they are trying to prevent payouts in this way. But please always remember, casinos are required by law to verify player balances, and the vast majority are honest and would never sell personal information to any third party. However, you should be aware that there are black sheep out there who display rather peculiar business conduct.
Why SOF Verification is Important
Money laundering is one of the biggest reasons why online casinos have to carry out a source of funds verification. Money laundering is the legal circulation of sums of money of illegal or even criminal origin, such as organized crime, drugs and arms trafficking, illicit trafficking in goods and merchandise, trafficking in illegal labor, human trafficking and exploitation of prostitution, serious and organized tax fraud, etc.
Terrorist financing is the provision or collection of funds (of legal or illegal origin) in the context of terrorist activities. No need to say that it is important that no such transactions can be facilitated with the help of an online casino.
While money laundering aims to conceal the illegal origin of the money, terrorism financing aims to mask its illegal destination. The processes for money laundering and terrorist financing are therefore slightly different. In any case, it is important for online casinos to know the origin of the funds if they are dealing with large sums of money to avoid potential violations.
The money laundering process generally consists of three stages:
- Placement: In this phase, the money launderer brings money of criminal origin into the financial system by dividing up large sums and depositing them in different accounts. These deposits are either made directly or through monetary instruments such as checks, transfers, or potentially also as deposits in an online casino. The sums thus split up are then diverted to accounts elsewhere.
- Concealing: During this phase, the money launderer increases the number of transactions of various kinds, such as purchases, sales, stock market investments, in order to disrupt the traceability of the sums of money and thus obscure their origin.
- Integration: In this third phase, the sums of money resurface and are reinvested in legal economic activities such as real estate, luxury goods, business creation, etc.
Unlike money laundering, financial transactions related to the financing of terrorist activities generally involve small sums. Hence, when terrorist organizations acquire money from legal sources, it is difficult to detect and track those sums of money. Therefore, the placement phase is less useful.
As with money laundering, terrorist organizations generally opt for the concealment phase to avoid attracting the attention of governments and to protect the identities of their clients and, ultimately, the beneficiaries of the sums of money collected.
SOF Verification – Conclusion
It can be frustrating for the players if they have to provide additional SOF documents to an online casino to verify their source of funds. However, we outlined some of the dangers that are closely related to monetary transactions over the internet that also include deposits and withdrawals in online casinos. For that reason, it is imperative that the operators follow the strict guidelines set out by their regulators to prevent any fraudulent activities.