Casinos asked to inform on guests

Friday, Sept. 24, 1999 | 9:20 a.m.

Treasury Secretary Lawrence Summers and Attorney General Janet Reno unveiled the strategy Thursday as part of a package of proposed rules and laws aimed at stopping the flow of illegal money through the U.S. financial system.

Banks and other financial institutions already have to submit "suspicious activity" reports to the Treasury Department's Financial Crimes Enforcement Network. The new proposal adds casinos and other business sectors - such as brokerage firms and check cashers - that handle large sums of money.

Under the department's rules, suspicious activity would include failing to report transactions of more than $10,000, using a casino primarily for wire transfers or any transactions involving illegal funds.

Frank Fahrenkopf, president of the American Gaming Association, protested that it would be a mistake for casinos to use the same reporting process as banks.

"One size doesn't fit all. What works for the banks doesn't work for a casino," he said. "We don't want them to turn to a cookie-cutter approach."

By state law, Nevada casinos are required to submit suspicious activity reports to the Nevada Gaming Control Board.

Fahrenkopf said the federal rules for casinos were proposed by the Treasury Department in May 1998, and the new strategy doesn't offer much beyond that.

"There was nothing in this report that was new whatsoever," Fahrenkopf said of the casino provision. "We've been working closely with the department and dealing with them on this."

Noting recent allegations of a $10 billion money-laundering scheme involving Russian businesses and the Bank of New York, Summers said the plan would help halt the cleansing of drug money and other illegal funds through the financial system.

"Money laundering is the fuel that allows criminals to operate," Summers said at a news conference. "This strategy marks a new effort by the federal government to follow the money."

Reno said the strategy allows the government to catch up with changing financial technology and was not influenced by the Russian money laundering investigation. Money laundering "affects each and every hard working American citizen" by undermining the credibility of banks and other financial institutions, she said.

"The scheme of cleansing criminal money through legitimate bank accounts must be stopped now," Reno said, describing the strategy as the "second half of the equation" of the war on drugs.

Through the U.S. attorneys' offices, the Justice Department would coordinate any investigations of targets found through the reports.

Federal authorities say casinos are increasingly vulnerable to money laundering because of the range of financial services they offer, from wire transfers to casino checks, plus the growth of legalized gambling.

Nevada has taken the right steps in requiring casinos to report activity, Sen. Richard Bryan, D-Nev., said.

"The gaming industry has a number of unique aspects that separates it from banking," Bryan said.

New international crimes, including corruption of public officials and arms dealing, would be created through the package's proposed legislation. The crimes, which would not include tax evasion, would be subject to prosecution under the U.S. money-laundering laws.

The strategy unveiled Thursday was the first in a series of five annual reports called for by the Money Laundering and Financial Crimes Strategy Act of 1998.

Deputy Treasury Secretary Stuart Eizenstat said the administration will give its next report in February.