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December 19, 1996

NEW REQUIREMENTS TO START SOON TO LIMIT MONEY LAUNDERING AT CARD CLUBS

SACRAMENTO-- Attorney General Dan Lungren today applauded the U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCEN) proposal to more tightly regulate cash transactions at California cardrooms and Indian casinos.

"The Treasury Department's effort to clamp down on the potential money laundering problem in California's cardrooms is certainly welcome," said Lungren. "Just three years ago, Treasury officials identified California's cardrooms as the single largest potential for organized crime infiltration. This step should help to limit organized crime's reach into the industry."

The proposed federal rule would add card clubs to the definition of financial institutions under the Banking Secrecy Act -- a key tool used by the federal government to stop money laundering, bank fraud and tax evasion. Card clubs typically provide services similar to other financial institutions, including deposit and credit accounts, facilities for fund transfers from other financial institutions, check cashing and currency exchange services.

Since 1985, the Treasury Department has required record keeping and reporting of large cash transactions at state licensed casinos with gross annual revenue exceeding $1 million. Under the proposed rules, card clubs would be treated in the same manner as gambling casinos in other states. As of October, 1996, Indian casinos also came under the Banking Secrecy Act. In addition to the currency reporting provisions, card clubs will also be required to maintain a comprehensive record keeping program and establish anti-money laundering safeguards.

"While this new federal rule will not take effect until it clears the approval process next year, a new state law will tighten some financial reporting requirements for California's cardrooms," said Lungren.

On January 1, AB 3183, which requires card clubs to report large cash transactions, similar to other financial institutions, takes effect. The bill requires card clubs to report cash transactions of $10,000 or more. Those who fail to report face a potential felony violation.

"While these changes make it harder for criminal activity to occur, more law enforcement oversight is still desperately needed," said Lungren. "That is why I will once again introduce a gambling control bill in 1997. Card tables are no longer supplemental income sources for bars, restaurants and small stores. They are big businesses with numerous cash transactions and a strong need for regulation."

For the past four years, Lungren has called for an independent Gambling Control Commission or similar measure to oversee California card room gambling. Each year the proposal has proceeded further through the legislative process, only to face defeat, despite overwhelming statements of support. Currently, there are 216 card clubs in California with 1,932 card tables. Eighteen card clubs are considered to be large scale clubs with 15 tables or more. According to a gambling industry magazine, more than $8.89 billion were wagered at California cardrooms in 1995.





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