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|Issued:||July 1, 2009|
|Subject:||Structuring by Casino Patrons and Personnel|
The Financial Crimes Enforcement Network ("FinCEN") recently received information from law enforcement and regulatory authorities that certain casino personnel may have complied with requests from patrons to evade, or provided instructions to patrons on how to evade, reporting and recordkeeping requirements under the Bank Secrecy Act ("BSA").1 It appears that casino patrons and personnel may have engaged in "structuring" certain transactions to evade such requirements.2 The BSA prohibits any person, for the purpose of evading the requirement to report currency transactions or evading recordkeeping requirements under the BSA, from causing or attempting to cause a casino not to file a currency transaction report, to file a currency transaction report with material misstatements or omissions, not to maintain records required under the BSA, or to maintain these records in a form that is incomplete or inaccurate.3 FinCEN is issuing this advisory to remind casinos and card clubs that structuring is unlawful, and that such activity can give rise to significant civil and criminal penalties under the BSA.4 FinCEN is authorized to impose civil money penalties against casinos violating the BSA, and the U.S. Department of Justice prosecutes criminal violations of the BSA and related money-laundering statutes.5
Casinos subject to the BSA are required to develop and implement a compliance program reasonably designed to manage the risk of illicit activity and ensure compliance with the BSA and its implementing regulations.6 The BSA requires casinos to file reports, properly identify customers conducting transactions, and maintain appropriate records of transactions. These reports and records are highly useful in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.7
Recent accounts from law enforcement and regulatory authorities allege that certain casino patrons may have conspired with casino personnel to structure transactions to evade BSA reporting and/or recordkeeping requirements. The following scenarios are illustrative of the relevant conduct being alleged:8
For any of these types of activities, casinos are obligated to file FinCEN Form 102, Suspicious Activity Report by Casinos and Card Clubs ("SARC"). Since structuring or any suspicious activity by casino personnel and patrons, including collusion and/or misuse of position by casino personnel including a casino host, constitutes reportable activity under the SARC provisions, a casino or card club is required to provide full disclosure of the subjects, identifying information and affiliations, business or employee relationships and associations in the applicable reporting items of the SARC, including the narrative part of the form.
Casinos are required also to deter, detect and report structuring by implementing a compliance program reasonably designed to prevent casino personnel and patrons from circumventing BSA requirements. A casino's written anti-money laundering program must be tailored to the risks of its business, and ensure that internal controls, training, independent testing and designated personnel are in place to deter, detect and report structuring.9 If structured transactions involve or aggregate to at least $5,000 in funds or other assets, a casino must file a suspicious activity report.10
FinCEN is authorized to assess civil money penalties against a casino, card club, or any partner, director, officer, or employee thereof, for willful violations of BSA anti-money laundering program, reporting, and recordkeeping requirements, as follows:
FinCEN may also seek injunctive relief against future violations of the BSA.14
The Internal Revenue Service, Small Business/Self Employed Division ("IRS SB/SE") examines casinos for compliance with the BSA, under delegated authority from FinCEN.15 The IRS SB/SE can conduct examinations to address BSA compliance concerns on a singular, regional or national basis. The IRS has been advised of alleged structuring activity by casino patrons and personnel, and will be reviewing the adequacy of casino BSA compliance programs, as appropriate, to promote prevention, detection and reporting of any such activity. If the IRS discovers significant deficiencies, including structuring at a casino or card club, the matter will be referred to FinCEN for disposition, including consideration of civil money penalties or other sanctions.
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Questions or comments regarding the contents of this advisory should be addressed to the FinCEN Regulatory Helpline at (800) 949-2732.