According the Bank Secrecy Act (BSA) law in USA, a casino, with an annual gaming revenue of more than $1,000,000 is considered a financial institution.
The broader the array of financial services available at the casino (e.g., front-money deposit accounts, marker limit/credit extensions, wire transfer procedures, gives an opportunity for a money launderer to exploit several different services for illicit purposes.
Regulatory risk is associated with not meeting the AML/TF regulatory obligations such as: not reporting suspicious matters, not fulfilling customer identity verification requirements, or not having an AML/CTF Program could derive in enforcement actions from gaming authority.
To safeguard the risks associated with money laundering practices, AML programs are risk based and should identify and assess their money laundering risks and adopt effective measures to mitigate those risks.
The United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) promulgates and enforces rules designed to prevent and detect money-laundering activities. Let’s see recent cases of enforcement actions on casinos that provides a clear vision that even having AML programs and compliance officers bypassed the controls:
Case 1: In April 2016, FinCEN announced an enforcement action against Nevada’s Sparks Nugget, Inc. including a $1 million fine, for willful disregard of AML laws. According officials, the casino Lacked a Culture of Compliance. hosting convicted embezzlers and disregarding repeated alerts to suspicious transactions by its own compliance manager.
Case 2: In July 2016, California’s Hawaiian Gardens casino was fined of USD 2.8 million by the FinCEN. The investigation found that The Gardens continued to conduct business with patrons they themselves had identified as suspicious even these customers repeatedly refused to provide identification information. IRS examiners also found that certain employees of The Gardens were helping customers structure transactions to avoid SAR filing requirements.
As these two enforcement actions illustrate, that these two companies lacked a culture of compliance from the tone at the top.
What is a Casinos’s culture of compliance?
A tone a the top effort drived by the board of directors and oversight officials to support the compliance efforts to mitigate any Money laundering risks by creating mitigate AML program, internal controls, policies and procedures and designating a compliance officer. Monitoring Customers gaming activities and identification is a key issue in the compliance mandatory rules.
Although the contents of each compliance program will differ based on the size of the company and the nature of its operations, certain due diligence procedures are standards. The pillars of a Risk based AML program are:
In the bill of projects under consideration in Brazil will be mandatory:
These systems shoud let monitor the gaming level of any player (daily, monthly, etc.) to assess possible Money laundering activities.
In the circumstance that a company faces with criminal or regulatory problems, the demonstration of a compliance program and a history of commitment to that program can serve as a mitigating circumstance as it has benn seen in other countries.
FEDERICO LANNESFederico Lannes – Certified Public Accountant, Master in Business Administration at (INCAE/Harvard). Member of the Institute of Internal Auditors (IIA), Ex-CEO del Intercontinental Mendoza, General Manager at Salto Hotel and Casino (Uruguay), General Manager at Altos del Arapey Hotel (Uruguay). Casino Internal Audit Manager, casino credit manager and compliance Officer at Iguazu Grand Resort and Casino (Argentina), Business Consultant at hotels and casinos (in Paraguay). Consultant at Ernst&Young (Argentina). Mr Lannes has been a scholar of the organization of American states at INCAE MBA program in Costa Rica. He has written many articles in argentinian newspaper like infobae, Fortune Magazine, Empresa Magazine, Boletim de Novidades Lotéricas (Brazil), andGames Magazine Brazil. Speaker at Brazilian Gaming Congress, 2d and 3rd edition. Specialized in management, taxation, gaming compliance and hotel-casino openings. Ex- professor of finance at the university of Palermo in Buenos Aires.