The American Gaming Association has offered the US government a package of best practices for combating money laundering in casinos in a bid to head off the threat of federal demands for more detailed personal information on their biggest players.
“For a number of years, individual properties and companies within the casino industry have made anti-money laundering compliance a priority, but the best practices are really the first time the industry came together as one to tackle this,” said Geoff Freeman, chief executive of the Washington, D.C.-based lobbying group.
US casinos have long been required to report large cash transactions and suspicious customer activity. But last year they were told to step into line with the more comprehensive requirements of the Bank Secrecy Act, the US government’s primary anti-money laundering law.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which makes and enforces anti-money laundering rules pursuant to the act, is weighing whether to require casinos to vet the sources of high rollers’ funds. Looming behind this is an increasing risk of civil or even criminal penalties from FinCEN and the Justice Department. This was driven home to the industry last year when NYSE-listed Las Vegas Sands, a leading global operator in Las Vegas, Macau and Singapore, paid US$47 million to avoid prosecution in connection with a Justice Department investigation into large cash deposits its Las Vegas casinos accepted from a Chinese-Mexican high roller wanted in Mexico on drug trafficking charges.
The scrutiny has reached into Macau as well, the largest source of LVS’ earnings, where the company’s Hong Kong-listed Sands China subsidiary is reported to be demanding greater disclosures from the junket operators who control the high-end trade in the Chinese casino hub.
Last October, Las Vegas-based Caesars Entertainment (Nasdaq: CZR) disclosed that FinCEN was investigating a subsidiary over alleged shortcomings in compliance with the Bank Secrecy Act.
More recently, Wynn Resorts (Nasdaq: WYNN), which also operates in Macau under a Hong Kong-listed subsidiary, was contacted by the Internal Revenue Service, an arm of the Treasury Department, in connection with its money-laundering safeguards. According to a report published last month by The Wall Street Journal, the contact was made through an outside lawyer for the company as part of a request for information about US and foreign customers, the company’s domestic and overseas marketing offices and its internal controls.
The AGA recommendations delivered to FinCEN run to 17 pages and were the work of about 20 casino compliance officers and lawyers overseen by the association’s Bank Secrecy Act compliance unit. The document outlines money laundering risks, regulatory requirements and compliance strategies and says casinos should take extra steps to determine where customers’ money originates in transactions that might be considered risky.
The recommendations are reported to mention Macau as a jurisdiction of concern.