Casinos a vital line of defense in fight against money laundering

April 17, 2018 11:41 PM
  • Buck Wargo, CDC Gaming Reports
April 17, 2018 11:41 PM
  • Buck Wargo, CDC Gaming Reports

A former officer for the Financial Crimes Enforcement Network said Monday that the reporting requirements for casinos make a huge difference in cracking down on money laundering.

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Leonard Senia, a consultant and senior advisor for the Spectrum Gaming Group, told an audience at the National Indian Gaming Association Tradeshow & Convention that the banking industry had recently sought to increase the minimum currency transaction report (CTR) threshold from $10,000 – a level put in place in 1970 under the United States Bank Secrecy Act – to somewhere between $25,000 and $30,000.

“These CTRs are incredibly valuable,” Senia said during an anti-money laundering session during the first day of the convention.

The increase request came from the American Banking Association, which argued that financial institutions were filing the CTRs at an enormous rate. That has been the case, Senia said, because incomes have risen dramatically since 1970 – a year in which someone could buy two supercharged Chevrolet Impalas for that amount and still have money left over.

Senia said he could find no written evidence for how the $10,000 threshold was initially determined.

A recent FBI study looked at transactions of between $10,000 and $30,000 over a six-year period and learned that nearly 75 percent of the CTRs filed would have been between those amounts.

“They found out 65 percent got direct hits on criminal investigations,” Senia said, in illustrating the importance of the CTR debate. “You can be assured that argument will come back.”

“The only thing I could think of is that they thought they would come up with such a big figure that the banking industry wouldn’t scream too badly,” Senia said. Many people in 1970 made less than $10,000 a year, and if someone was doing cash transactions of that amount or higher, there was a reason to question where it came from.

“What was a high threshold in the 1970s is probably a perfect threshold now,” Senia said. “The requirement has caught up with the economy. 10 to 15 years, from now that may be too low.”

The current compliance program requirements for the casino industry are the most comprehensive of any financial institution in the U.S., and those requirements continue to grow.

In 2003, the casino industry filed approximately 5,400 Suspicious Activity Reports (SARs) with the Financial Crimes Enforcement Network, which is part of the U.S. Treasury Department. That number stood at 27,500 in 2013 but has jumped dramatically since to more than 46,500 in 2014 and more than 57,300 in 2016.

In 2013, the Las Vegas Sands Corp., the operator of the Venetian, agreed to return more than $47 million that federal authorities said it received under suspicious circumstances. It avoided criminal prosecution after cooperating and agreed to strengthen internal compliance programs.

The case centered on a high-stakes gambler who was later linked to international drug trafficking and made numerous large and suspicious deposits with the casino, federal authorities said. Authorities later said the casino should have filed suspicious activity reports under the Bank Secrecy Act.

Dealers are in a good position to observe suspicious activity and report it to their casinos, Senia said.

The incident happened when Jennifer Shasky Calvery was serving as director of the Financial Crimes Enforcement Network between 2012 and 2016.

“The Venetian case shocked her (enough to say), what is going on here, and… we’ve got to change our standards,” Senia said.