Feds boosting efforts to catch money launderers

David Strow

Monday, Sept. 17, 2001 | 9:58 a.m.

The federal government is apparently resuming efforts to tighten anti-money laundering efforts at casinos across the country.

At issue are changes to the U.S. Treasury Department's suspicious activity reporting requirements, first proposed in 1998. Currently, all casinos are required to report any currency transaction above $10,000 with FinCEN, a law enforcement arm of the Treasury Department. Casinos may also use the transaction forms to report any currency activity that is considered "suspicious."

But the Wall Street Journal reported last week that the Treasury Department is considering changes to these requirements that will raise reporting requirements considerably for casinos.

Under the new rules, casinos would be required to file a report whenever a casino "knows, suspects, or has reason to suspect" a currency transaction of $3,000 or above is suspicious. Any activity with "no business or other lawful purpose" would be considered suspicious.

The Treasury Department's proposal would probably not affect Nevada casinos, industry lobbyists said, as they are already required to report such transactions under state gaming regulations. With passage of these regulations in 1997, the Treasury Department exempted Nevada from the federal regulation.

Since that time, several high-profile money laundering scandals have shaken the banking industry, but none have occurred in Nevada casinos, said Bill Bible, president of the Nevada Resort Association, and chairman of the Nevada Gaming Control Board when the Nevada regulations were adopted.

"I think it has worked well ... it's worked as intended," Bible said. "It rests on the cooperation of the industry ... (and regulators) have never found or detected any money laundering (since its passage). I think the rules have done what they were intended to do."

Draft regulations should be introduced in January, the Journal reported, quoting an unnamed senior Bush administration official.

The American Gaming Association is making it clear it does not approve.

"This basically adds another level of bureaucracy ... yet another level of bookkeeping and reporting," said Judy Patterson, executive director of the AGA. "We've been down this road before (when changes were first proposed in 1998), and we were quite happy for it to be at a dead end. We expect when this rule comes out, we will still have serious reservations about it."

A key point that's drawing the AGA's fire is the "reason to suspect" clause. Nevada's regulation contains this language, but also includes language that allows casino employees to exercise their own judgment in deciding which transactions are suspicious.

The Treasury Department's original proposal in 1998 contained no such language, Patterson said.

"What Nevada did was use subjective determination, in the judgment of the casino, which we believe is the correct standard," Patterson said. "The federal rule would use an objective standard. The Treasury Department would be second-guessing what's going on in the casino in our view.

"It's very vague, and we think it puts us at greater liability."

Patterson also took issue with the lowering of the reporting threshold to $3,000.

"Banks have to report $5,000 and over, so why should we be any different?" Patterson said. "Why is there a lower threshold for casinos than for banks?"

A third problem is the "no business or lawful purpose" clause. Nevada's regulation contains such language, but adds that the transaction "is not the sort of transaction in which the particular patron would normally be expected to engage... ."

Without that language, "all transactions would technically be considered suspicious unless substantiated by a real 'business or lawful purpose,"' an AGA summary paper said.

"Casino patrons do not have business purposes on a gaming floor and casinos must presume the worst: Guilty until proven innocent," the summary paper said.

Once a draft regulation is introduced, there will be a six-month comment period before it takes effect, the Journal reported.

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