Treasury Notes

 Culture of Compliance and Casinos

By: Jamal El-Hindi

Two years ago, Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an   Advisory to U.S. Financial Institutions on Promoting a Culture of Compliance.”  Since issuing that advisory we know that many financial institutions have taken positive steps to improve their compliance culture, but there is more to be done.
FinCEN writes and enforces the rules that financial institutions – including depository institutions such as banks, and also money services businesses and casinos – need to follow to guard against money laundering, terrorist financing, and other financial crime.  FinCEN also collects reports from financial institutions and acts as the bridge to share that information with law enforcement and regulatory investigators. 
In order to maintain an effective national anti-money laundering (AML) and countering the financing of terrorism (CFT) regime, FinCEN works with financial institutions to ensure they have the appropriate systems and procedures in place. While many AML/CFT compliance deficiencies identified by U.S. authorities are corrected through cautionary letters or other guidance by the regulators to the institution’s management without the need for an enforcement action or penalty, two recent FinCEN penalties against casinos underscore our focus on instituting a culture of compliance within financial institutions.  Just this week, on October 3rd, FinCEN issued a $12 million penalty against Cantor Gaming of Nevada.  That action followed a $2.8 million penalty FinCEN issued against Hawaiian Gardens Casino of California on July 15.
To fight money laundering effectively, an organization must have trained individuals at every level and provide those individuals with the proper resources and systems needed to carry out their compliance duties.  Perhaps most importantly, compliance staff need support from the leaders of their organizations. 
That wasn’t the case with Cantor Gaming and Hawaiian Gardens.  Both casinos failed to train and support their staffs.  Both casinos failed to properly file, or just did not file, the Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTR), which contain valuable information used to fight financial crimes financial crimes.  Employees, and even senior managers, actually helped customers avoid having SARs and CTRs filed as the law requires.  A former Vice President of Cantor Gaming even pled guilty to a felony count of illegal gambling conspiracy in 2013 for his role as part of an illegal gambling operation. The leaders of any financial institution would benefit from reading the penalty assessments against Cantor Gaming and Hawaiian Gardens.  FinCEN reserves its penalties for the most egregious violations of its rules.  
Despite these two cases, casinos appear to be steadily improving their anti-money laundering efforts.  For example, in 2010 casinos filed fewer than 14,000 SARs with FinCEN.  In 2015, casinos filed almost 50,000 SARs.  Those numbers tell us that casinos are paying more attention to their AML/CFT responsibilities. 
FinCEN subject matter experts regularly attend casino industry conferences to speak about the latest illicit finance issues relevant to the industry. These experts have noted increased attendance, and interest, in panels that focus on anti-money laundering issues.  We certainly recognize and encourage these positive efforts.
A good compliance culture is one where doing the right thing is rewarded, and where “looking the other way” has consequences. FinCEN will continue to work with the casino sector on its compliance efforts, in order to ensure each casino is taking the appropriate actions to protect the gaming industry – and the greater U.S. financial system – from abuse.
Jamal El-Hindi is the Acting Director of the Financial Crimes Enforcement Network.
Posted in:  FinCEN
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