Graded KYC for online gaming platforms likely to receive MeitY approval

Platforms must follow verification procedure as prescribed under RBI's directions for entities regulated by it

The Ministry of Electronics and Information Technology is likely to give its approval to a graded approach towards know-your-customer (KYC) norms for online gaming platforms as part of the proposed rules for the sector, informed sources.

According to the proposed amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, the online gaming intermediaries are required to identify the user and verify his/her identity at the time of registration of a new account for an online game.

The rules add that the platforms should follow the verification procedure as prescribed under the Reserve Bank of India’s (RBI’s) directions for entities regulated by it.

Several gaming companies have demanded that users should be allowed to register on platforms using a one-time password and a self-declaration of name and identification number of any ‘mandatory document’ for deposits up to ~10,000.

On the other hand, a full KYC requirement will mandate platforms develop mechanisms such as a video-based customer identification process. Several platforms have demanded relaxation from such a requirement up to a threshold of the deposit amount.

The companies have suggested the ministry go for KYC procedures that could be implemented along the lines of the RBI’s master directions for small prepaid payment instruments. The ministry is likely to approve the demand, sources told Business Standard.

“The KYC requirement will be the same as prescribed by the RBI. We don’t want to create any additional requirement for KYC,” said a senior official.

The ministry conducted multiple rounds of consultations after it released the draft amendments on January 2. It also invited comments on the website of MyGov.

The ministry has received a “decent amount of feedback” from companies, law firms, industry bodies, and civil society organisations, said a person familiar with the matter.

The rules require all gaming intermediaries to register themselves with a self-regulatory organisation (SRO) and display a registration mark on their games.

The ministry is also considering the demand for a provisional period of three months to collect enough data to prove that their platform was providing a game of skill.

According to the proposals, the companies may submit an undertaking to seek temporary approval from the SRO.

The rules define online game as any game that is offered on the internet and is accessible by a user through a computer resource if he/she deposits with the expectation of earning winnings. Once the policy is enacted, the gaming platforms will be required to observe due diligence under the rules, including ‘reasonable efforts’ to cause its users not to host, display, upload, publish, transmit or share an online game not in conformity with Indian law, including any law on gambling or betting.

Keeping a check

What the rules state

• Intermediaries must identify user and verify identity at time of registration
• Platforms must follow verification procedure as prescribed by RBI
• Full-KYC requires platforms to conduct video-based customer identification process

What platforms have sought

• Relaxation from such requirement up to threshold deposit amount of Rs 10,000
• Users be allowed to register with OTP
• Self-declaration of name and identification number of any ‘mandatory document’