§ 1021.210 Anti-money laundering program requirements for casinos. (a) Requirements for casinos. A casino shall be deemed to satisfy the requirements of 31 U.S.C. 5318 (h) (1) if it implements and maintains a compliance program described in paragraph (b) of this section. A sign marks the Trump Taj Mahal Hotel and Casino, in Atlantic City, New Jersey, May 8, 2004. While some experts believe the Trump administration will not move to weaken anti-money-laundering. On 10 January 2020 changes to the Government's Money Laundering Regulations came into force. They update the UK's AML regime to incorporate international standards set by the Financial Action Task Force (FATF) and to transpose the EU's 5th Money Laundering Directive. This page highlights some specific new areas that firms need to comply with.
Paul King Jin's name has once again resurfaced in British Columbia and it is related to money laundering allegations. A CA$25,000 bank draft located in his personal car was linked to Great Canadian Casinos. The British Columbia government filed a lawsuit against him, claiming that the said amount of Canadian dollars should be seized, as it might be crime proceed.
British Columbia has been linked to money laundering in the past, especially when it comes to the local gambling scene and the opportunities for dirty cash laundering it provides. The lax regulations existent in the past have allowed this practice to go on for years without interruption, as several reports have revealed. Paul King Jin's name has been mentioned in the past in relation to money laundering allegations.
Casino Money Laundering Proceeds
One of the latest lawsuits against the individual points towards a bank draft reaching CA$25,000. The draft has been previously located in a Mercedes vehicle associated with Mr. Jin. The amount in question was made out to Great Canadian Casinos back in the spring of 2017. The new lawsuit claims that the CA$25,000 might be linked to money laundering activities taking place facilitated by gambling operation.
The provincial government wants to see action on the subject and the forfeiture of the aforementioned bank draft. It could be recalled that back in May 2017, the Combined Forces Special Enforcement Unit captured the Mercedes and following the obtainment of a search warrant, it located the bank draft inside of the vehicle. Mr. Jin is known for operating as a loan shark across the Lower Mainland.
Casino locations such as River Rock Casino in Richmond, overseen by Great Canadian Gaming have been a regular location for him. His activities included cash delivery for high rollers willing to pay more once they have spent their initial stack of cash. Reports have shown that he has been most active over the span of three years between 2012 and 2015.
Lawsuit Filed against Mr. Jin
Over the said period of time, Mr. Jin was able to complete some 140 casino transactions involving substantial amounts of cash. Reports have shown that it reaches CA$23,501,46 but the actual sum might surpass this amount. In relation to these transactions, he was mentioned several times in the notorious E-Pirate probe that came to a halt towards the end of 2018. It should be taken into account that his operation have reportedly continued regardless of the regulations.
He was banned from casino venues still had the chance to supposedly wash some CA$4.2 million at River Rock Casino in Richmond over 2014 and 2015. As it was alleged by documents that surfaced about a year ago, Mr. Jin was allowed to pour in the millions of Canadian dollars in cash at the casino venue despite the fact that he was prohibited from entering the casino venues and conducting his business.
British Columbia Lottery Corporation considered him an extreme risk type of individual, which had prompted his ban in 2012. The most recent lawsuit alleges that crime proceeds are what aided Mr. Jin to purchase the bank draft, therefore mandating its seizure. In the past, his name has been linked to the management of illegal gambling dens, money laundering, extortion, as well as not reporting taxable income.
Second Part of a Two-Part Series
As we blogged yesterday, British Columbia's ('B.C.') Attorney General David Eby recently released an independent and very detailed report examining money laundering in B.C.'s gaming industry and providing 48 recommendations to combat the problem. See Peter M. German, QC, Dirty Money: An Independent Review of Money Laundering in Lower Mainland Casinos conducted for the Attorney General of British Columbia (Mar. 31, 2018) ('German Report'). As we noted yesterday, when discussing the U.S. regulatory system, the German Report favorably cites the Nevada Gaming Commission and Nevada Gaming Control Board, whose Enforcement Division 'acts as a first line of defence against organized crime and bulk cash buy-ins[,]' and further observes that the federal Financial Crimes Enforcement Network, '[i]n partnership with Internal Revenue Service, acts as the enforcement arm for most money laundering issues.'
The U.S.'s more robust, streamlined AML regulatory regime, although hardly perfect, stands in stark contrast to the dysfunction alleged in the German Report that plagues B.C.'s current framework. In this post, we describe the U.S. AML regulatory regime for the gaming industry, and the recent enforcement actions which it has produced. Although the pace of AML enforcement has been somewhat sporadic, it appears to be increasing over time in regards to the gaming industry. Certainly, attention by regulators — as well as by the industry itself — to AML/BSA compliance has increased over the last several years.
Money Laundering Regulations 2017
The U.S. AML Regulatory Framework for the Gaming Industry
As a threshold matter, the Financial Crimes Enforcement Network ('FinCEN') has authority to investigate casinos for compliance with and violations of the Bank Secrecy Act ('BSA'). FinCEN, in turn, has delegated to the Internal Revenue Service ('IRS') its authority to examine casinos for compliance with the BSA. Under this framework, if the IRS identifies significant BSA violations during a casino examination, FinCEN initiates an investigation into that casino and, depending on the investigation's outcome, may assess a civil penalty against the casino. As a result, the IRS and FinCEN work in conjunction while enjoying broad mandates that are not at odds with one another.
Casino Money Laundering Cases
And, in contrast to the B.C. system described in the German Report, the U.S. has implemented more streamlined regulatory requirements for casinos pursuant to the Bank Secrecy Act ('BSA'), including:
- Filing suspicious activity reports ('SARs') for suspicious transactions of at least $5,000;
- Filing currency transaction reports ('CTRs') for cash ins or cash outs exceeding $10,000;
- Complying with certain recordkeeping requirements for up to five years, including a casino's receipt of funds for each customer, bookkeeping entries for debits or credits into a customer's casino account, and credit extensions exceeding $10,000; and
- Implementing AML compliance programs.
FinCEN issued guidance in 2010 regarding AML/BSA compliance programs in the gaming industry, stating that, 'at a minimum,' such a program must include:
- A system of internal controls to assure ongoing compliance with the BSA;
- Internal or external independent testing for compliance with a scope and frequency commensurate with the risks of money laundering and terrorist financing posed by the products and services provided;
- Training of casino personnel, including training in the identification of unusual or suspicious transactions;
- An individual or individuals to assure day-to-day compliance with the BSA;
- Procedures for using all available information to determine and verify, when required, the name, address, social security or taxpayer identification number, and other identifying information for a person;
- Procedures for using all available information to determine the occurrence of any transactions or patterns of transactions required to be reported as suspicious;
- Procedures for using all available information to determine whether a record required under the BSA must be made and retained; and
- For casinos and card clubs with automated data processing systems, use of the programs to aid in assuring compliance.
Arguably, the gaming industry remains one of the last bastions of a major business that still often deals significantly in cash — in a world increasingly driven by technology and credit. To that end, some gaming businesses may attract a disproportionate share of customers seeking to avoid ensconced BSA reporting and record-keeping requirements, including the CTR filing requirement. Similar to some of the allegations in the German Report, some casinos also may attract certain individuals from across the globe who potentially are attempting to undermine certain laws in their home country, including tax reporting obligations.
AML Enforcement and the Gaming Industry
In recent years, FinCEN has shown an increased focus on AML compliance in the gaming industry. Best online casino free money no deposit. It assessed only three civil penalties against casinos, for a total of $1.6 million, from 2003 to 2014. In contrast, it imposed approximately $110 million against casinos from 2015 through 2016 and has pursued four significant enforcement actions since 2016.
As we have blogged, FinCEN announced on May 3, 2018 that it imposed a $5 million civil monetary penalty against Artichoke Joe's for the casino's alleged deficiencies in its BSA compliance. FinCEN asserted that Artichoke Joe's AML program failed to implement sufficient procedures to identify loan-sharking operations. It found that: (1) the club's senior management admitted loan-sharking operations were commonplace and observed by employees; (2) the club failed to file SARs and CTRs in compliance with the BSA; and (3) the club failed to undertake an independent audit after illegal loan sharking was initially detected.
FinCEN also pursued three large enforcement actions in 2016, about which we have also blogged:
Anti Money Laundering Regulations
British Columbia has been linked to money laundering in the past, especially when it comes to the local gambling scene and the opportunities for dirty cash laundering it provides. The lax regulations existent in the past have allowed this practice to go on for years without interruption, as several reports have revealed. Paul King Jin's name has been mentioned in the past in relation to money laundering allegations.
Casino Money Laundering Proceeds
One of the latest lawsuits against the individual points towards a bank draft reaching CA$25,000. The draft has been previously located in a Mercedes vehicle associated with Mr. Jin. The amount in question was made out to Great Canadian Casinos back in the spring of 2017. The new lawsuit claims that the CA$25,000 might be linked to money laundering activities taking place facilitated by gambling operation.
The provincial government wants to see action on the subject and the forfeiture of the aforementioned bank draft. It could be recalled that back in May 2017, the Combined Forces Special Enforcement Unit captured the Mercedes and following the obtainment of a search warrant, it located the bank draft inside of the vehicle. Mr. Jin is known for operating as a loan shark across the Lower Mainland.
Casino locations such as River Rock Casino in Richmond, overseen by Great Canadian Gaming have been a regular location for him. His activities included cash delivery for high rollers willing to pay more once they have spent their initial stack of cash. Reports have shown that he has been most active over the span of three years between 2012 and 2015.
Lawsuit Filed against Mr. Jin
Over the said period of time, Mr. Jin was able to complete some 140 casino transactions involving substantial amounts of cash. Reports have shown that it reaches CA$23,501,46 but the actual sum might surpass this amount. In relation to these transactions, he was mentioned several times in the notorious E-Pirate probe that came to a halt towards the end of 2018. It should be taken into account that his operation have reportedly continued regardless of the regulations.
He was banned from casino venues still had the chance to supposedly wash some CA$4.2 million at River Rock Casino in Richmond over 2014 and 2015. As it was alleged by documents that surfaced about a year ago, Mr. Jin was allowed to pour in the millions of Canadian dollars in cash at the casino venue despite the fact that he was prohibited from entering the casino venues and conducting his business.
British Columbia Lottery Corporation considered him an extreme risk type of individual, which had prompted his ban in 2012. The most recent lawsuit alleges that crime proceeds are what aided Mr. Jin to purchase the bank draft, therefore mandating its seizure. In the past, his name has been linked to the management of illegal gambling dens, money laundering, extortion, as well as not reporting taxable income.
Second Part of a Two-Part Series
As we blogged yesterday, British Columbia's ('B.C.') Attorney General David Eby recently released an independent and very detailed report examining money laundering in B.C.'s gaming industry and providing 48 recommendations to combat the problem. See Peter M. German, QC, Dirty Money: An Independent Review of Money Laundering in Lower Mainland Casinos conducted for the Attorney General of British Columbia (Mar. 31, 2018) ('German Report'). As we noted yesterday, when discussing the U.S. regulatory system, the German Report favorably cites the Nevada Gaming Commission and Nevada Gaming Control Board, whose Enforcement Division 'acts as a first line of defence against organized crime and bulk cash buy-ins[,]' and further observes that the federal Financial Crimes Enforcement Network, '[i]n partnership with Internal Revenue Service, acts as the enforcement arm for most money laundering issues.'
The U.S.'s more robust, streamlined AML regulatory regime, although hardly perfect, stands in stark contrast to the dysfunction alleged in the German Report that plagues B.C.'s current framework. In this post, we describe the U.S. AML regulatory regime for the gaming industry, and the recent enforcement actions which it has produced. Although the pace of AML enforcement has been somewhat sporadic, it appears to be increasing over time in regards to the gaming industry. Certainly, attention by regulators — as well as by the industry itself — to AML/BSA compliance has increased over the last several years.
Money Laundering Regulations 2017
The U.S. AML Regulatory Framework for the Gaming Industry
As a threshold matter, the Financial Crimes Enforcement Network ('FinCEN') has authority to investigate casinos for compliance with and violations of the Bank Secrecy Act ('BSA'). FinCEN, in turn, has delegated to the Internal Revenue Service ('IRS') its authority to examine casinos for compliance with the BSA. Under this framework, if the IRS identifies significant BSA violations during a casino examination, FinCEN initiates an investigation into that casino and, depending on the investigation's outcome, may assess a civil penalty against the casino. As a result, the IRS and FinCEN work in conjunction while enjoying broad mandates that are not at odds with one another.
Casino Money Laundering Cases
And, in contrast to the B.C. system described in the German Report, the U.S. has implemented more streamlined regulatory requirements for casinos pursuant to the Bank Secrecy Act ('BSA'), including:
- Filing suspicious activity reports ('SARs') for suspicious transactions of at least $5,000;
- Filing currency transaction reports ('CTRs') for cash ins or cash outs exceeding $10,000;
- Complying with certain recordkeeping requirements for up to five years, including a casino's receipt of funds for each customer, bookkeeping entries for debits or credits into a customer's casino account, and credit extensions exceeding $10,000; and
- Implementing AML compliance programs.
FinCEN issued guidance in 2010 regarding AML/BSA compliance programs in the gaming industry, stating that, 'at a minimum,' such a program must include:
- A system of internal controls to assure ongoing compliance with the BSA;
- Internal or external independent testing for compliance with a scope and frequency commensurate with the risks of money laundering and terrorist financing posed by the products and services provided;
- Training of casino personnel, including training in the identification of unusual or suspicious transactions;
- An individual or individuals to assure day-to-day compliance with the BSA;
- Procedures for using all available information to determine and verify, when required, the name, address, social security or taxpayer identification number, and other identifying information for a person;
- Procedures for using all available information to determine the occurrence of any transactions or patterns of transactions required to be reported as suspicious;
- Procedures for using all available information to determine whether a record required under the BSA must be made and retained; and
- For casinos and card clubs with automated data processing systems, use of the programs to aid in assuring compliance.
Arguably, the gaming industry remains one of the last bastions of a major business that still often deals significantly in cash — in a world increasingly driven by technology and credit. To that end, some gaming businesses may attract a disproportionate share of customers seeking to avoid ensconced BSA reporting and record-keeping requirements, including the CTR filing requirement. Similar to some of the allegations in the German Report, some casinos also may attract certain individuals from across the globe who potentially are attempting to undermine certain laws in their home country, including tax reporting obligations.
AML Enforcement and the Gaming Industry
In recent years, FinCEN has shown an increased focus on AML compliance in the gaming industry. Best online casino free money no deposit. It assessed only three civil penalties against casinos, for a total of $1.6 million, from 2003 to 2014. In contrast, it imposed approximately $110 million against casinos from 2015 through 2016 and has pursued four significant enforcement actions since 2016.
As we have blogged, FinCEN announced on May 3, 2018 that it imposed a $5 million civil monetary penalty against Artichoke Joe's for the casino's alleged deficiencies in its BSA compliance. FinCEN asserted that Artichoke Joe's AML program failed to implement sufficient procedures to identify loan-sharking operations. It found that: (1) the club's senior management admitted loan-sharking operations were commonplace and observed by employees; (2) the club failed to file SARs and CTRs in compliance with the BSA; and (3) the club failed to undertake an independent audit after illegal loan sharking was initially detected.
FinCEN also pursued three large enforcement actions in 2016, about which we have also blogged:
Anti Money Laundering Regulations
- Cantor Gaming: FinCEN assessed a $12 million civil penalty against Cantor Gaming for purportedly 'egregious and systemic' AML compliance failures on October 3, 2016. It found that Cantor Gaming failed to (1) provide adequate AML training for its officers and employees; (2) use all available information to identify and report suspicious transactions; and (3) maintain adequate internal controls to detect money laundering.
- Hawaiian Gardens Casino: On July 15, 2016, FinCEN imposed a $2.8 million civil penalty against the casino for allegedly repeatedly violating its BSA requirements. FinCEN attributed these failures to the club's lack of a compliance culture, emphasizing that: (1) its leadership failed to meet as required by its charter; (2) its leadership failed to review and approve its risk assessment; and (3) its management failed to implement policies and procedures for customer identification.
- Sparks Nugget: On April 5, 2016, FinCEN imposed a $1 million civil penalty against the company for purportedly engaging in willful and repeated AML violations. FinCEN alleged that: (1) the company's committee for deciding whether to file SARs never actually met and it included members that did not know that they were on the committee; (2) the company prohibited its compliance managers from interacting with BSA examiners; and (3) the casino used customer information only to further its business interests and not to comply with the BSA.
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