Familiar names appear in money laundering report
It’s called the National Money Laundering Risk Assessment, and it’s one of those yearbooks the image-conscious folks at Gaming Inc. would rather not find their names in.
Each year the U.S. Department of Treasury issues its money laundering status report along with its National Terrorist Financing Risk Assessment in a one-two punch that helps bring the risk that illicit money changing poses to the U.S. financial system and national security into a sharper focus.
It’s neither a scandal nor a surprise that the Money Laundering Risk Assessment devotes part of its review to the casino industry as part of a section titled “Vulnerabilities and Risks: Money Laundering Methods.” With more than 1,300 casinos and card rooms in 42 states, according to the American Gaming Association, and 246 Native American tribes generating $27 billion in revenue in 2012, the stakes are high. Not surprisingly, Nevada and New Jersey casinos generated more than 40 percent of the 27,000 Suspicious Activity Reports filed in 2013.
Casinos are similar to banks in some areas when it comes to filing reports and tracking cash transactions. “Casinos and card clubs subject to the (Bank Secrecy Act) BSA are required to develop, implement, and maintain an (Anti-Money Laundering) AML program; file casino (Currency Transaction Reports) CTRs and SARs; and maintain certain transaction records,” the report says. “Casinos do not have a distinct customer identification program obligation.”
That’s likely in the process of changing as the treasury department and its Financial Crimes Enforcement Network (FinCEN) continue to battle money laundering to fight everything from drug trafficking to terrorism financing. Casino reporting has evolved substantially in recent years. Most gaming properties are obliged to established procedures to collect customer identification, “for record keeping and reporting purposes and to use the casino’s computer system to aid in assuring compliance,” the report states, echoing the remarks of FinCEN Executive Director Jennifer Shasky Calvery at the 2014 Bank Secrecy Act Conference in Las Vegas. “These systems are also expected to be used in identifying transactions or patterns of transactions required to be reported as suspicious, including in relation to a customer’s source of funds.”
Some of the names in the report will sound familiar.
A bookmaking scandal at the M Resorts generated more than two dozen defendants and took down the casino’s sports book boss Mike Colbert. The insider job provided a text book example of why the regulatory apparatus exists.
And there’s the Department of Justice’s positively mortifying money laundering investigation against Las Vegas Sands in connection with the criminal activities of former customer Sinaloa drug cartel associate Zhenli Ye Gon. In 2013, the Treasury Department agreed to conclude a criminal investigation after Sands agreed to pay to the United States $47.4 million, the sum sent to The Venetian casino by Zhenli Ye Gon from Mexico.
Which raises the issue of the international flow of illicit funds to Las Vegas gaming resorts and those casinos operated by Nevada licensees. This is one to watch.
“As U.S. casino companies expand internationally, with foreign marketing branches and sister properties, there is the potential for a person to establish a casino account in one country and access the funds through an affiliated casino in another country,” the report says. “The most significant money laundering vulnerability at U.S. casinos is the potential for individuals to access foreign funds of questionable origin through U.S. casinos, and to use the money for gambling and other personal or entertainment expenses, and then withdraw or transfer the remaining funds either in the United States or elsewhere.”
Remember those words in the coming months. I have a strong feeling we’re going to be hearing a lot more about the flow of big money from foreign jurisdictions into the U.S. via some highly questionable casino transfers.
Who knows, maybe those transfers will make next year’s NMLRA yearbook.
John L. Smith’s column appears Sunday, Tuesday, Wednesday, Friday and Saturday. E-mail him at jsmith@reviewjournal.com or call 702-383-0295. Follow him on Twitter: @jlnevadasmith
