FinCEN enforces the BSA through rules, regulations and penalties. This authority relates to Indian casinos, which the regulations define as financial institutions. Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities.
A. The dictionary defines suspicion as "the act or an instance of suspecting; believing of something bad, wrong, harmful, etc. with little or no supporting evidence."
Some things that a patron could do that might be considered suspicious are:
- Exchanging many small bills for large ones
- Exchanging several monetary instruments, such as traveler’s checks, for one casino check
- Regularly conducting currency transactions that are just below $10,000
- Purchasing chips and then, after minimal gambling, redeeming the chips for a check
- Using other patrons to cash-out chips
- Supplying other patrons with cash to purchase chips
- Using the casino purely for its financial services
- Using identification that appears to be altered or forged
B. The BSA mandates that casinos develop and implement a program that is reasonably designed to assure and monitor compliance with the BSA. The program must include compliance with all the requirements of the BSA and training of casino employees, since they are so important in the efforts to combat money laundering. The reporting of suspicious activities is essential to an effective anti-money laundering program. Many areas in a casino need to be alert for transactions that should be reported. Obviously, the financial staff will play a part in compliance-the accounting department, the cage employees, etc. Security/surveillance also has a role to play. However, gaming floor personnel are crucial to an effective anti-money laundering program. They are often the first and best to recognize transactions that could be suspicious, since they are the ones dealing with the patrons every day. These employees are most likely to have a sense of which transactions seem to be outside the scope of legitimate wagering activities. The Federal government can regulate and monitor money laundering, but will never have the special casino knowledge of a casino employee. Effective March 25, 2003, casinos and card clubs are required to report suspicious activities meeting certain criteria.
Suspicious Activity Report (SAR), is used to report a suspicious activity. Use FinCEN BSA E-Filing System to electronically file the SAR. The SAR is required to be filed within 30 calendar days of the date that the suspicious activity is detected. The casino may be allowed an additional 30 calendar days to electronically file if it cannot identify the suspect on the date the suspicious transaction is detected. A suspicious activity report is required to be filed if the casino knows, suspects, or has reason to suspect that:
- The activity involves funds derived from illegal activity
- The activity is designed to hide assets derived from illegal activities, to evade federal law or avoid reporting requirements
- The activity is to evade the Bank Secrecy Act requirements
- There is no business or apparent lawful purpose
- The activity involves the use of the casino to facilitate criminal activity
Suspicious Activity Reports are required for suspicious activities involving $5,000 or more in funds or other assets (single transaction or aggregated). Casinos are encouraged to report suspicious transactions that are under $5,000, such as the submission by a patron of an identification document the casino suspects is false or altered. (See Section C for robbery or burglary). If a currency transaction exceeds $10,000 and is suspicious, the institution must electronically file both Suspicious Activity Report (SAR), and Currency Transaction Report (CTR).
If an individual or organization conducts multiple or related suspicious activities within the 30-calendar day period after the date of initial detection, the reporting institution may consider reporting the suspicious transactions on one form but only if doing so will fully describe what has occurred. A new report must be filed for other related suspicious transactions committed after the initial detection period. A casino is not required to file a SAR for a robbery or burglary committed or attempted that is reported to appropriate law enforcement authorities.
C. SAR identification - casinos and card clubs may rely upon their own internal records, including copies of federal forms, which contain verified customer information, to identify the subjects of these reports. If a casino does not have verified identification information on the individual(s), they should use whatever other sources of customer information are available in the casino’s internal records. Examples of documents used to verify a customer’s identity may include credit, deposit, or check cashing account records, CTR’s, IRS Form W-2G (Certain Gambling Winnings), IRS Form W-9 (Request for Taxpayer Identification Number and Certification), or any tax or other form containing such customer information. If the customer is "unknown", casinos should consider using whatever other internal sources that are available to obtain the customer’s identification (hotel registrations, show reservations, credit card numbers, river boat casino reservation records, etc.).
D. Miscellaneous provisions of BSA that you should know. Federal law (31 U.S.C. 5318(g)(3)) provides complete protection from civil liability for all reports of suspicious transactions made to appropriate authorities, including supporting documentation, regardless of whether such reports are filed pursuant to the form’s instructions or are filed on a voluntary basis. Federal law (31 U.S.C. 5318(g)(2)) provides that a financial institution, and its directors, officers, employees, and agents, who, voluntarily by means of a suspicious activity report, report suspicious transactions to the government, may not notify any person involved in the transaction that the transaction has been reported. There is a specific prohibition against disclosing that an SAR has been filed, so a casino may NOT provide a copy or even inform the patron that one has been filed.
The Internal Revenue Service’s Office of Indian Tribal Governments (ITG) is available for help. A local ITG specialist can provide further explanation and assistance. They can assist you with the education of your employees on the BSA or answer any questions you may have. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has a Financial Hotline, (866) 556-3974, which can be used to report suspicious activities that may relate to terrorist activity. FinCEN’s Web site has additional information about money laundering.