Second Part of a Two-Part Series

As we blogged yesterday, British Columbia’s (“B.C.”) Attorney General David Eby recently released an independent and very detailed report examining money laundering in B.C.’s gaming industry and providing 48 recommendations to combat the problem. See Peter M. German, QC, Dirty Money: An Independent Review of Money Laundering in Lower Mainland Casinos conducted for the Attorney General of British Columbia (Mar. 31, 2018) (“German Report”).  As we noted yesterday, when discussing the U.S. regulatory system, the German Report favorably cites the Nevada Gaming Commission and Nevada Gaming Control Board, whose Enforcement Division “acts as a first line of defence against organized crime and bulk cash buy-ins[,]” and further observes that the federal Financial Crimes Enforcement Network, “[i]n partnership with Internal Revenue Service, acts as the enforcement arm for most money laundering issues.”

The U.S.’s more robust, streamlined AML regulatory regime, although hardly perfect, stands in stark contrast to the dysfunction alleged in the German Report that plagues B.C.’s current framework. In this post, we describe the U.S. AML regulatory regime for the gaming industry, and the recent enforcement actions which it has produced.  Although the pace of AML enforcement has been somewhat sporadic, it appears to be increasing over time in regards to the gaming industry.  Certainly, attention by regulators — as well as by the industry itself — to AML/BSA compliance has increased over the last several years.

Continue Reading The U.S. Casino and Gaming Industry: AML/BSA Regulation and Enforcement

U.S. Regulatory Regime Favorably Cited in Report for B.C. Attorney General

First Part in a Two-Part Series on Gaming Industry and AML

British Columbia’s (“B.C.”) Attorney General David Eby recently released an independent and very detailed report examining money laundering in B.C.’s gaming industry and providing 48 recommendations to combat the problem. Eby appointed Peter German, a former deputy police commissioner and leading expert on money laundering, to conduct a six-month investigation into allegations of money laundering in the Lower Mainland casinos after reports emerged that one Vancouver-based casino accepted $13.5 million in $20 bills over the course of one month in 2015.  See Peter M. German, QC, Dirty Money: An Independent Review of Money Laundering in Lower Mainland Casinos Conducted for the Attorney General of British Columbia (Mar. 31, 2018) (“German Report”)

Following German’s investigation, which included over 150 interviews with industry and government insiders in B.C., Ontario, and the United States, German issued the German Report to detail his findings and recommendations. The report reveals that a multitude of alleged criminal syndicates, tied primarily to China, have used Vancouver-area casinos to launder money.  It highlights the anti-money laundering (“AML”) challenges faced by a predominantly cashed-based industry, and also underscores the systemic issues that have made B.C.’s gaming industry an alleged breeding ground for money laundering: a dysfunctional, fragmented regulatory regime that lacks independence.  To streamline and strengthen B.C.’s regulatory framework, the German Report recommends creating an independent gaming regulator analogous to the regulatory regime in the United States.  The German Report focuses on the Nevada Gaming Commission and Nevada Gaming Control Board, whose Enforcement Division “acts as a first line of defence against organized crime and bulk cash buy-ins[,]” whereas the federal Financial Crimes Enforcement Network, “[i]n partnership with Internal Revenue Service, acts as the enforcement arm for most money laundering issues.”

In announcing the German Report, Eby blamed the former Liberal government for “turn[ing] a blind eye to the escalating money laundering in B.C. casinos.” He also stated his acceptance of all 48 of these recommendations.

In this post, we will describe the findings and recommendations of the German Report.  In the next post, we will contrast the B.C. regulatory regime described in the German Report with the AML regulatory regime in the United States involving the gaming industry, and the recent enforcement actions which it has produced.

Continue Reading British Columbia’s Gaming Industry Reportedly Faces Serious Money Laundering Vulnerabilities

FinCEN announced on May 3, 2018 that Artichoke Joe’s, a card club and casino located in San Bruno, California and founded in 1916, has entered into a revised civil money penalty assessment regarding alleged deficiencies under the Bank Secrecy Act (“BSA”).  The most interesting aspect of this revised assessment is that it allows the casino to reduce its original $8 million penalty by $3 million if it successfully completes certain compliance undertakings.

No press release has been issued to date by FinCEN regarding this revised assessment, so its specific genesis is unclear.  Nonetheless, the revised assessment illustrates that financial institutions facing Anti-Money Laundering (“AML”)/BSA enforcement actions might be able to mitigate the financial consequences — not only when negotiating the initial penalty assessment, but even after it has been imposed — by undertaking steps towards enhanced compliance and monitoring.  It is also unclear whether the onerous nature of the original assessment, when compared to the available financial resources of the assessed institution, may have played a role in the revision. Continue Reading FinCEN Extends $3 Million Carrot to Card Club and Casino: Reduce Assessed Civil Penalty by Completing Compliance Undertakings

2016 was a busy year for developments in Anti-Money Laundering (AML), the Bank Secrecy Act (BSA), the criminal money laundering statutes, forfeiture, and related issues. In part one of our year-in-review, we discuss six key topics:

  • The Panama Papers and its spotlight on the United States as a potential money laundering haven

You can read more about these topics areas in the blogs that follow. Click here to read the full article 2016 Year in Review: Money Laundering (Part One).

If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. To learn more about Ballard Spahr’s Anti-Money Laundering Team, please click here.

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.

Continue Reading 2016 Year in Review: FinCEN Enforcement Actions in Gaming Focus on Culture of Compliance

The Financial Action Task Force (FATF) highlighted in its December 2016 Mutual Evaluation Report on the United States’ Measures to Combat Money Laundering and Terrorist Financing the “excellent results” in compliance and supervision in the U.S. gaming industry during the period of 2007 to 2016. The report noted that efforts by regulators and the gaming industry have led to enhanced AML and Combating the Financing of Terrorism (CFT) compliance. The assessors specifically mentioned the efforts of the American Gaming Association (AGA), including its study, Investing in America’s Financial Security: Casinos’ Commitment to AML Compliance. The FATF report also included several recommended actions related to gaming.

Continue Reading 2016 Year in Review: FATF Report Recommends Expanding Gaming Examinations and Section 314 Efforts; Praises Progress in Gaming Industry Compliance