If you’re a casino in the U.S., or a casino that is part of a U.S. group, you’re almost certainly a non-bank financial institution (NBFI). You have a bunch of rules to follow, customers to know, patterns to watch out for, dollar routes to follow, and suspicious activity and customer transaction reports to file.
This also means there are a ton of confusing terms you’ve got to know: KYC, Title 31, Title 26, AML, BSA … the list goes on.
If you’ve ever wondered why you need to know these terms, or why you should care at all, take 30 seconds to register and download our a handy FREE guide, which breaks the complex into easily understandable FAQs, and helps you understand how to protect yourself, and your casino’s assets and reputation.
Here’s a sample from the guide:
How much money is laundered globally per year?
While exact numbers are obviously difficult, if not impossible, because of the nature of laundering, the United Nations Office on Drug and Crime estimates that the amount of money laundered globally in one year is 2-5% of global GDP, or $800 billion to $2 trillion in current US dollars.
In many of our conversations on money laundering and Anti-Money Laundering (AML) requirements, we keep hearing about the BSA. What is the Bank Secrecy Act about?
In 1970, the United States Congress passed the Currency and Foreign Transactions Reporting Act, now called the Bank Secrecy Act. It required financial institutions in the U.S. to help government agencies identify and prevent money laundering, with a specific focus on the recording and reporting of cash purchases of things like bank notes, checks, demand drafts etcetera (referred to as negotiable instruments) of more than $10,000 (as a daily aggregate amount). They were also required to report any suspicious activity that might be indicative of money laundering, tax evasion, or other criminal transactions or events.
What does this have to do with casinos? They’re not banks.
No, but they deal in financial transactions. Think Casino, the movie, not an establishment, which was based on a fictionalized account of the time the Italian mob, more specifically the Chicago Outfit, skimmed money from a bunch of Las Vegas casinos. Businessman and gangster Al Capone, who was finally jailed in 1931 — not for running illegal gambling rackets or prostitution rings or murder, but for tax evasion, incidentally, once led the Chicago Outfit. There’s perhaps a lesson there. In any case, several, if not most, casinos are considered non-bank financial institutions (NBFIs) under law.
What do you mean by saying “most” casinos are considered NBFIs?
According to the IRS, casinos and card clubs licensed to do business as casinos or card clubs that have Gross Annual Gaming Revenues (GAGR) of more than $1,000,000 (annual means per year), are financial institutions subject to the requirements of the Bank Secrecy Act, which is codified in part in what is known as Title 31 of the United States Code (USC). Under this, certain financial institutions and individuals (defined by the Secretary of Treasury) are required to keep records and file reports on certain types of financial transactions. Which means they have to follow all reporting procedures under Title 31, or face the consequences of failure to report suspicious activity or a pattern of suspicious activity.
Is this the issue the Sands faced a few years ago?
Yes. The U.S. government made that very clear when the Las Vegas Sands Corp., which operates the Venetian-Palazzo hotel complex in Las Vegas, the Marina Bay Sands in Singapore, and the Sands Casino Resort in Bethlehem, PA, made an agreement with the Department of Justice in August 2013, to return $47,400,300 to the United States, to end an investigation into the casino’s reported failure to alert authorities that a high-stakes gambler, who was later linked to international drug trafficking, had made several large deposits with the casino.
And what exactly had they failed to do?
Here’s what the DOJ press release from the U.S. Attorney’s Office from California’s Central District, which was handling the matter, stated: “Pursuant to an agreement signed by officials with Las Vegas Sands last night, the company will return the money to the United States within 10 days.”