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|February 22, 1996|
Anti-Money Laundering Controls for Indian Tribal Casinos
The Treasury's Financial Crimes Enforcement Network (FinCEN) will issue a final rule tomorrow that brings tribal casinos under Treasury's anti-money laundering controls. The final rule delays the effective date of the rule to August 1, 1996, allowing tribal casinos sufficient time to design effective programs and train their staff members.
The regulation is issued under the Bank Secrecy Act (BSA), which is the core of the Treasury's program to combat financial crimes, including money laundering and tax evasion. The BSA is administered by FinCEN.
"As we continue to close the door to traditional money laundering methods, criminals seek new ways to hide their money," said Stanley E. Morris, FinCEN's Director. "Casinos are cash-intensive and many offer a wide variety of financial services, similar to banks. Without effective safeguards, they may be vulnerable to money laundering."
Since 1985, Treasury, through its BSA regulations, has required recordkeeping and reporting of large cash transactions occurring at state licensed casinos with gross annual gaming revenue in excess of $1 million. This information preserves a financial trail for investigators to follow and is an invaluable tool in criminal, tax, and regulatory investigations or proceedings. Congress specifically extended Treasury's BSA authority to tribal gaming when it enacted the Money Laundering Suppression Act in 1994.
Over the past 10 years, U.S. casino gaming has grown rapidly:
Industry sources report that in 1994 over 600 commercial casinos were licensed in 10 states and accounted for approximately $358.5 billion in wagering activity. Of the 600 casinos, about 370 have gross revenues in excess of $1 million.
Tribal casino growth has been just as dramatic, with approximately 120 tribal casinos located in 16 states, with new operations expected to open in an additional eight states within the coming year.
The most recent statistics available from the industry indicate that customers of Indian casino gaming establishments wager over $39 billion each year.
"With the tremendous growth of Indian gaming, the time is right for the industry to adopt money laundering controls," said Morris. He pointed out that the method of operation of casinos on Indian lands is no different than the method of operation of state licensed casinos. Therefore, regulatory requirements should be applied consistently.
Prior to issuing the proposed rule in July 1995, FinCEN consulted with tribal governments, Congress, and the National Indian Gaming Commission (NIGC). The National Indian Gaming Association (NIGA), and NIGC indicated their support of the decision to include casinos operated by or on behalf of Indian tribes within the Bank Secrecy Act rules, as did all those who commented on the rule.
Morris said that Treasury does not want to jeopardize the growth of Tribal gaming, which has such positive social and employment ramifications for the tribes involved. At the same time, he stressed that the industry must adopt reasonable controls to prevent and identify illegal financial transactions.
In order to provide a timely forum at which these regulatory requirements can be explained in depth, FinCEN will sponsor a one and a half day compliance conference on April 4-5, 1996 in Orlando, Florida. Representatives from the NIGA, the NIGC, and the American Gaming Association, as well as casino regulators, will also participate. The speakers will address subjects such as the specific components of an effective anti-money laundering BSA compliance program for casinos, the development of appropriate internal controls, the need for on-going training of casino personnel, and methods to recognize and report potentially suspicious transactions.
There will be no charge for attendance at the conference. However, space is limited. Any individual interested in attending should submit a written request by March 8, 1996, indicating his/her name, address, telephone number, and , if applicable, tribal casino affiliation. Requests may be mailed to Leonard Senia, U.S. Department of the Treasury, FinCEN, P.O. Box 39, Vienna, Virginia 22183, or submitted to Mr. Senia by telefax, at (703) 905-3690.
The final rule was "lodged" today with the Federal Register and will be published tomorrow, February 23, 1996.