Would-be high-rollers, take note: If you ever have a transaction of more than $10,000 at a casino, the staff there will gather information from you and file a report with the federal Financial Crimes Enforcement Network. You probably haven’t heard of FinCEN, but it’s a major player in our city’s biggest industry.
FinCEN, created in 1990, is a 340-employee bureau within the Treasury Department. Reporting to the Undersecretary for Terrorism and Financial Intelligence, the bureau is charged with preventing criminals from abusing the financial system. Its job is to collect intelligence and find the criminals. And under the federal Bank Secrecy Act of 1970, casinos are classified as financial institutions—hence the scrutiny applied to your 10 grand.
For casinos, this means making sure they give FinCEN what it needs. If they fail to file a Currency Transaction Report within 15 days, they face fines from $25,000 to $100,000, and the specific people involved can face much stiffer fines and even prison time. Just making a mistake while filling out the report merits a $1,500 fine. Multiply the number of $10,000-and-up transactions the average casino processes in a year, and you have an idea just how seriously casinos have to take Currency Transaction Reports.
Why all the fuss? Call it the war on money laundering. FinCEN gained new importance—and resources—after the passage of the Patriot Act, when it ramped up its anti-money-laundering efforts. FinCEN enforces the Bank Secrecy Act, which covers not only casinos and banks, but also insurance companies, securities brokers and jewelry dealers. Those organizations have one thing in common: They all handle large amounts of currency, and thus represent a potential opportunity for would-be launderers.
The relationship between casinos and FinCEN has changed in the last few years. In September 2012, Jennifer Shasky Calvery took over as chief of the bureau with a mandate to improve FinCEN’s anti-money-laundering capabilities; previously, she busted money launderers in her post at the Department of Justice. In an earlier stint with the department, she took down transnational criminal organizations as a prosecutor with the Organized Crime and Racketeering Section. Most believe she was brought in to make better use of FinCEN’s enforcement powers.
FinCEN’s renewed vigor has brought some friction with the gaming industry. Last fall, Shasky Calvery spoke at the Global Gaming Expo. She reminded industry leaders of the importance of their cooperation to the U.S. financial system and American national security. Then she spoke of a “culture of reluctant compliance” in some quarters of the industry that made such cooperation difficult. She stressed the benefits of embracing a partnership with FinCEN.
“Information sharing is important,” Shasky Calvery said. “Being a good corporate citizen and complying with regulatory responsibilities is also good for a company’s bottom line. It saves your casino from a large fine, and it saves your casino’s reputation, which is something that you can’t put a price on.”
Stressing that many of those present worked very hard at compliance, Shasky Calvery nonetheless went on to describe the more vigorous actions that a new stand-alone enforcement division would take, and reminded listeners that FinCEN can collect big fines, not only from companies, but also from offending partners, directors, officers and employees.
This means Las Vegas casinos are in a bind: If they collect information about their customers too vigorously, they may drive them away. The delicate nature of high-roller/host casino dynamics—particularly across cultures—can make asking the kind of questions FinCEN wants answered challenging, and sometimes even impossible. On the other hand, if casinos fail in their obligations under the Bank Secrecy Act, Shasky Calvery has put them on notice that they can expect to hear from the enforcement division.
The difficulties of squaring national anti-money-laundering policy with the status quo of high-roller relations may be the major problem facing Las Vegas casinos over the coming year. International high-rollers represent an increasing share of Las Vegas’ gaming win, while federal pressure to prosecute financial crimes continues to grow. For now, the industry and FinCEN are committed to working together. But any serious breakdown in that relationship has the potential to make the economic woes brought by the recession seem mild.
David G. Schwartz is the director of UNLV’s Center for Gaming Research.