How to Detect Gambling Transactions in Digital Banking
Banks must move beyond standard MCC codes to detect gambling transactions by using transaction data enrichment and contextual analysis.Summary
Detecting gambling activity in digital banking requires moving beyond standard Merchant Category Codes (MCC), which are often misused or insufficient. Gambling operators may deliberately miscode transactions, and payments routed through intermediaries like e-wallets (e.g., Skrill) or crypto exchanges further obscure the activity. Instead, banks should employ transaction data enrichment to identify the true merchant, analyze behavioral signals, and recognize spending patterns. This approach reduces false positives and allows for more effective, proportionate interventions, such as optional gambling blocks and budgeting nudges, which have proven successful at institutions like Monzo. Ultimately, enriched data is essential for compliance with anti-money-laundering regulations and for maintaining customer trust while mitigating financial risks.
(Source：Finextra)