Fraud and Risk Management for Online Gambling Operators in Brazil

More users, larger volumes of transactions, and massive amounts of money being wagered will make online gambling platforms even more attractive for fraud. Operators in Brazil must understand the fraud risks across user journeys and the measures to protect their platforms from becoming launchpads for criminal activities

Brazil ranks third, behind only the US and the UK, in terms of sports betting volume globally. This is especially impressive because sports betting in Brazil currently exists in an unregulated “gray market” with bettors using unlicensed, offshore gambling platforms. 

Now, with the recent passage of new regulations under the Law 14,790/23 that permit online casinos and gambling platforms to obtain licenses and operate in Brazil, not only the number of players, but also the revenues generated from sports betting in Brazil is poised to drastically increase. It is estimated that Brazil will likely earn $4.5 billion annually from tax proceeds from the regulated online gaming sector. With large volumes of transactions and money changing hands, online gambling and sports betting will only become a far more attractive target for fraud.

To ensure they have safe as well as compliant platforms, it is crucial for online gambling operators in Brazil to understand the fraud risks across user journeys and what measures they can take to enhance user security. They must deploy robust fraud and risk management capabilities that can thwart risky gambling behavior, while ensuring game integrity and compliance with KYC and AML regulations.

Guidance and supervision

It is pertinent to note that Brazil’s new gaming regulations not only provide guidance on physical, online, sports-themed, and other virtual games, but also specify the areas of compliance, including fraud prevention and risk management, AML, CFT, player protection, and maintaining game integrity.

Furthermore, to ensure consumer protection, while maintaining the overall gaming experience, the federal government will register betting operators, conduct rigorous KYB, AML checks, and analyze their documentation and websites. Therefore, online gambling companies operating in Brazil must ensure they have the proper fraud and risk management mechanisms in place that protect consumers from various types of fraud plaguing the online gambling industry.

Fraud tactics continue to evolve

Fraudsters exploit vulnerabilities to attack online gambling platforms across the user journey – from login to deposit and withdrawal. Using stolen or compromised CPF numbers together with fake personally identifiable information, they create synthetic identities and register multiple fake accounts. These accounts are then used to power several crimes such as bonus abuse, account takeover, payment fraud, affiliate fraud, chargebacks, under-age gambling, money laundering, and criminal financing, among others.

As fraud tactics continue to evolve, reliance on CPF verification alone cannot provide the level of authentication that online gambling platforms need today. Further, manual reviews exacerbate the problem as they are not only prone to errors and biases, but are also known to delay processing of user requests. All these factors can disrupt users’ online gambling experience and lead to a bad customer experience.

The urgent need for effective fraud and risk management

Fraud and risk management in online gambling is essential to safeguarding users and platforms from abuse and financial losses. Users expect the operators to protect their sensitive personal and financial information from potential abuse. Failure to live up to these expectations can jeopardize customer relationships and damage market reputation. It can impact revenue generation opportunities and the ability to retain or acquire new customers.

Fraud and risk management is also crucial to comply with the prevailing regulations and avoid legal or regulatory penalties.

Effective fraud and risk management fights fraud, ensures regulatory compliance

Effective fraud and risk management begins right at the start of the user journey, with operators verifying users before allowing them further access to the products or services on their platforms. Depending on the risk assessment of every user, offering a personalized verification process can streamline the user verification process, improve onboarding experience, and improve conversion rates. This also helps prevent under-age gambling, stop users identified as PEPs or those listed on sanction lists from accessing the platform, and safeguarding the business from potential fraud and legal risks.

For comprehensive fraud and risk management, gambling operators need a multilayered approach that allows them to verify user identities, identify anomalous or suspicious user activities, secure in-platform transactions, perform continuous KYC and AML checks, and ensure compliance with the licensing requirements.

Balancing fraud and risk management with superior user experience and regulatory compliance can be a tough ask for operators in Brazil. To navigate the unique sports betting landscape in the country, operators must look for a partner that has Brazil-specific experience and expertise. A partner that offers comprehensive fraud and risk management capabilities that address the unique challenges of the Brazilian market with a fully-compliant, technology-driven, and user-centric solution.

Caf, the experts in online gambling market in Brazil

Founded and headquartered in Brazil, Caf has demonstrated proven expertise in the online gambling market. With expert knowledge of the country’s online gambling environment, Caf enables operators to grow business in the country while navigating the regulatory landscape with ease.

CAF makes the entire fraud and risk management process simple and user-friendly, enabling operators to verify users faster and more accurately, thereby onboarding more genuine users. Leveraging the latest technologies, such as artificial intelligence, machine learning, facial biometrics, optical character recognition, and multi-factor authentication (MFA), Caf delivers the best user authentication capabilities on the market with superlative gaming experience for genuine users. 

Powered by its market-leading solutions including identity verification, document verification, background checks, CPF consultation, facematch with liveness detection, and continuous monitoring, Caf delivers superior user verification capabilities. Further, iBeta-certified biometric technology, near real-time validation of thousands of unique documents, and the latest threat intelligence from Caf network and ALL.ID, empower Caf’s partners to identify and stop fraudsters early in their tracks, mitigating potential losses and abuse.

Caf makes fraud and risk management simple. This enables its partners to protect their business and consumer interests effectively and ensure compliance with the country’s regulatory landscape. To learn how Caf helps online gambling platforms maximize business growth while balancing fraud prevention with user experience, book a demo now.

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