Rule calls for casinos to report suspicious transactions

Jeannine Aversa

Thursday, Sept. 19, 2002 | 9:52 a.m.

WASHINGTON -- Casinos will have to file reports on suspicious financial transactions to the federal government as part of the Bush administration's effort to catch drug dealers, terrorists and others involved in money laundering.

The rule announced today by the Treasury Department takes effect in six months and would apply to casinos in the United States with gross annual revenues of more than $1 million.

Casinos must file suspicious activity reports with the government for any questionable transaction or series of transactions valued at $5,000 or more, Treasury said.

"Although there's been almost no evidence of money laundering at casinos, this industry is committed to joining with other financial services companies in taking all reasonable steps to ensure our businesses are not used to support terrorism or any other illegal activity," said Frank Fahrenkopf, president of the American Gaming Association.

Nevada and New Jersey casinos have had to file suspicious activity reports to their states for several years, said Judy Patterson, the association's senior vice president and executive director.

Identifying suspicious transactions, she said, is a difficult task for several reasons, including "the fast-paced casino environment, with lots of games going on and lots of customers." Employees must be well trained to spot dubious transactions, she said.

Banks and securities firms affiliated with banks have been filing suspicious activities reports to Treasury's Financial Crimes Enforcement Network since 1996. Wire-transfer and other money-service businesses were required to start filing such reports at the beginning of this year.

Also today, Treasury proposed requiring life insurance companies and investment companies not registered with the Securities and Exchange Commission -- such as hedge funds, commodity pools and real-estate investment companies -- to adopt comprehensive programs to combat money laundering.

Earlier this year, Treasury adopted a rule requiring banks, credit card firms and many other financial companies to set up such anti-money-laundering programs.

Companies would have to train employees to detect money laundering methods, establish policies and procedures to identify risks and minimize opportunities for abuse, and commission independent audits.

Money laundering involves the movement of profits from drug or arms trafficking, political corruption, prostitution and other illegal activities through a series of accounts or businesses to disguise them as proceeds of legitimate business.

Treasury's General Counsel David Aufhauser said today's rules and proposals are aimed at snagging money launderers and terrorist financiers. "It catches both," he said.