Gamers question cash reporting rules

Mark D. Preston and John Wilen

Thursday, May 28, 1998 | 10:37 a.m.

WASHINGTON -- The Treasury Department is proposing rules that would require gaming institutions nationwide to report suspicious financial transactions greater than $3,000.

The proposal, modeled after a similar Nevada regulation implemented in November, could go into effect by early 1999, said Peter Djinis, associate director for the Treasury's Financial Crimes Enforcement Network.

The American Gaming Association is working with the Treasury Department on the issue, but wants to see some changes to the rule as it has been proposed, an official said.

"We do have some concerns about the proposed rule," said Judy Patterson, senior vice president and executive director of the AGA.

The rule would require companies that gross more than $1 million a year from gaming to report financial transactions in which they suspect funds were derived from illegal activity, used for illegal purposes, or where there might be intent to commit financial fraud such as tax evasion.

Djinis said the proposal should not be considered an anti-gaming act, because it is similar to suspicious activity reporting rules that banks, credit unions and thrift institutions have followed for the past two years.

"The one thing we do want to make clear is that this proposal is not intended to suggest that casinos are particularly vulnerable to abuse by money launderers, financial fraud and tax cheats," said Djinis, adding the Treasury worked closely with Nevada gaming officials to draft the proposal. "But on the other hand given the substantial number of financial services that (casinos) provide the public, it is reasonable to have similar anti-money laundering controls as they exist for bankers and other financial institutions."

But Patterson said the proposed Treasury rule differs from existing Nevada regulations in one crucial respect: the Nevada law leaves it up to casinos to decide whether a particular transaction should be considered "suspicious." The proposed Treasury rule does not define whose judgement should be used to determine what constitutes suspicious, and in fact gives some examples of potentially suspicious activity.

The fear, Patterson said, is that casinos will be held liable for failing to report transactions that they did not judge suspicious, but which an independent accountant with little gaming industry experience might see differently.

The AGA is also concerned with the $3,000 threshold at which the reporting requirement kicks in, Patterson said. The minimum threshold for banks is $5,000, she said.

"We want to get a little bit better understanding why the limit has been set where it is," Patterson said.

The lower the limit, the greater the number of transactions that must be reported, and the greater the casino expense, she said.

Djinis said the Treasury expects to receive about 3,000 suspicious activity reports from gaming institutions during the rule's first year.

Djinis said the Treasury is also looking at imposing similar rules on other financial institutions.

The Treasury will host three hearings this summer on the proposed rule.