Because the gaming industry has been known to attract some bad actors who attempt to use its financial services to conceal or transfer illicit wealth, AML compliance remains a key concern in this growing business sector.
Three significant 2016 enforcement actions emphasized that the gaming industry is particularly relevant to FinCEN’s focus on the importance of cultivating a culture of robust AML/BSA compliance within financial institutions. These enforcement actions also suggest that some segments of the gaming industry are still in the process of attaining a fully mature AML compliance culture.
- Cantor Gaming: On October 3, 2016, FinCEN assessed a $12 million civil penalty against Cantor Gaming for alleged “egregious and systemic” violations of the program, reporting, and recordkeeping requirements of the BSA. In particular, FinCEN alleged that Cantor failed to: provide sufficient AML training for its officers and employees; use all available information to detect and report suspicious transactions; and maintain sufficient internal controls to detect ongoing criminal activity by its Director of Risk Management and Vice President and his co-conspirators. “When greed clouds judgment within the leadership of an organization, and when even explicit warnings are ignored, it is a sign that the organization’s compliance culture is damaged or nonexistent,” FinCEN Acting Director Jamal El-Hindi remarked in a press release about the settlement.
- Hawaiian Gardens Casino: On July 15, 2016, FinCEN assessed a $2.8 million civil penalty against card club Hawaiian Gardens Casino for repeated alleged BSA violations, including failure to implement and maintain an effective AML program and failure to comply with BSA reporting and recordkeeping requirements. FinCEN specifically attributed these failures to Hawaiian Gardens’ lack of compliance culture, stating that “leadership at [the card club] did not take an active role as it should have in promoting a strong culture of compliance.” FinCEN noted that: the club’s BSA committee, which included casino management, failed to meet as required by its charter; its leadership did not review and approve its risk assessment; and its management failed to establish policies and procedures regarding customer identification. FinCEN also criticized Hawaiian Gardens’ failure to take corrective action in response to findings of significant BSA violations by both the IRS and the card club’s own independent consultant, allowing violations to go uncorrected for years.
- Sparks Nugget: On April 5, 2016, FinCEN assessed a $1 million civil penalty against Sparks Nugget, Inc., relating to its alleged willful and repeated violations of the program, reporting, and recordkeeping requirements of the BSA. In particular, FinCEN alleged that Sparks Nugget had systemic compliance failures, a poor compliance culture, and “a blatant disregard for AML compliance that permeated all levels of [the casino].” FinCEN said Sparks Nugget: “chose not to file rightfully prepared [SARs];” had a committee to determine whether to file SARs that never met and several of whose putative members did not know that they were on the committee; and ordered its compliance manager not to interact with BSA examiners. FinCEN also criticized the casino for failing to use the information it gathered about customers to ensure BSA compliance, and instead only used it to further business interests.
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