Regulation To Help Casinos Fight Money Laundering, Bensten Says

Immediate Release

Treasury Secretary Lloyd Bentsen said regulations taking effect Thursday, December 1, will give casinos new tools to counter money laundering.

"Our goal is to shape effective counter-money laundering policies while reducing unnecessary regulatory burden," Bentsen said. "We want to enable financial institutions, including casinos, to be more effective and responsive in taking steps to prevent and detect money laundering, and in supporting swift enforcement actions."

The regulations come under the Bank Secrecy Act, or BSA, which is at the core of Treasury's program to combat financial crimes including money laundering and tax evasion. It is administered by Treasury's Financial Crimes Enforcement Network, known as FinCEN.

The most important provisions of the newly effective regulations include:

  • a requirement that casinos establish and maintain written BSA compliance programs that emphasize the use of automated systems, the need for independent audits of compliance, and the training of casino employees; and
  • enhanced requirements for customer identification with the opening of a deposit or credit account at a casino.

Although the regulations go into effect on December 1, there will be a six-month period for casinos to put the new procedures in place. The regulations were originally issued in March 1993 and were scheduled to become effective in September 1993. Their effective date was extended until December 1994 while Treasury determined how best to implement the measures. The final product reflects comments by state regulators and representatives of the casino industry.

As part of its effort to reduce regulatory burden, Treasury has withdrawn some provisions of the regulations which could have imposed significant costs on casinos and required significant changes in gaming procedures, without clear off-setting compliance benefits. Under the reduction efforts, Treasury has:

  • eliminated a provision from the original regulations which would have required casinos to record and verify the identification of any customer whose transactions in currency on a gaming day reached $3,000 (and to track those transactions at $500 intervals);
  • withdrawn a provision that casinos obtain missing customer information when a customer's multiple transactions in aggregate, exceed $10,000 in currency;
  • eliminated a provision requiring casinos to maintain a chronological record identifying all transactions occurring at the cashier's window; and
  • withdrawn a requirement that casinos maintain a list of customers who are known by aliases.

"We believe that the 1993 Regulations can be safely altered in light of our intention to issue regulations in the near future requiring financial institutions, including casinos, to report suspicious transactions and establish counter-money laundering measures including, 'know your customer' policies and programs," said Ronald K. Noble, Treasury's Under Secretary for Enforcement. "With this in mind, the modifications to the 1993 regulations should not reduce the value of information that casinos are required to maintain or report, or more importantly, reduce the level of BSA compliance by casinos."

Today's actions are the first of several steps Treasury will take within the next year to apply its new counter-money laundering programs to casinos and other non-bank financial institutions. Thus, for example, the details of the required compliance program include terms that anticipate Treasury's adopting of suspicious transaction reporting requirements applicable to casinos, among others.

In addition, FinCEN anticipates publishing in the near future a notice of rulemaking that would propose making certain Indian gaming establishments subject to appropriate provisions of the BSA and, as a related matter, would propose exempting many small casinos from reporting and recordkeeping rules designed for larger establishments.

Although casinos in Nevada have been exempted from compliance with the reporting and recordkeeping requirements contained in the BSA regulations since 1985, the exemption requires Nevada to maintain a state casino regulatory system which "substantially meets the reporting and recordkeeping requirements" of the BSA regulations, including those that became effective on December 1.

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