Increasing Title 31 enforcement means casinos need to know their customers

April 19, 2018 9:57 PM
  • Dave Newton
April 19, 2018 9:57 PM

With the increase in Title 31 enforcement action, and considering the penalties for infractions, casinos need to have a plan in place to get relevant information about their customers, according to Know Your Customer: Title 31 Compliance, a panel discussion held Wednesday morning at the 2018 NIGA Tribal Gaming Conference.

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There is no requirement in the law that says that you must know your customers, according to Mary Magnusen of the Jacobson Law Group, one of the panelists, but the law does require casinos to report any potential suspicious activity, and there’s no way to do this without gathering information about customers.

Julie Hakman, President and CEO of AmericanChecked, cited the technological advances that are making it easier for casinos to gather information about their customers. Hakman went on to say that the most common questions she gets from casinos usually deal with criminal background checks and noted that there are a wide range of tools available for these, including databases at the county, national and international levels.

One readily available resource that some compliance people tend overlook, she said, are the lists of excluded people maintained by state gaming control boards, including the Nevada Gaming Control Board.

Sophisticated new technology also continues to make it easier to authenticate and confirm individual identities, another vital area of information gathering that casinos need to concern themselves with.  Several methods of authenticating government-issued IDs have been available for a while, she said, but the capability is now available on mobile devices.

This can be combined with live in-person identification using facial recognition to confirm identity, and these programs have become very accurate, she said.

Magnusen pointed out that casinos need to be sure that the information they collect is very well secured.

The third member of the panel, Jamul Tribal Gaming Commission Executive Director Joe Osterloh, said that there had been increasing enforcement of Title 31 in card rooms in California, and he expects enforcement to become more of an issue for casinos.

This can be an expensive proposition, Magnusen said, because fines can be imposed for close to $55,000 per infraction, per day, for willful violations. She emphasized that willful violations don’t need to have an improper purpose; just turning a blind eye to compliance is considered a willful violation.

It’s a real challenge for a casino to identify where all the money is coming from, Osterloh said.  Casinos need to make sure they have an effective program, including making sure people on the casino floor are aware of the casino’s responsibilities for being alert and for reporting suspicious activity.  Osterloh related a recent case in which he got a message from the casino floor that there was a player pulling hundred dollar bills out of a backpack to gamble with.  He was able to research the player and found out it was a recent lottery winner.

Magnusen began the presentation with a brief overview of Title 31.  The Bank Secrecy Act was passed in 1970 mainly to prevent money laundering and tax evasion and was expanded to other industries, including casinos, in 2001 as a part of the Patriot Act with the added purpose of preventing terrorist financing.

Casino are required to have an anti-money laundering program and to track transactions of $10,000 and more, she said, as well as to report any suspicious activity.  This makes it necessary for casinos to know their clients, so they need to create a program to achieve this, and casino employees need to be trained to understand their responsibilities.   She pointed out that the plan needs to be written and up-to-date and recommended that casinos that have not recently reviewed their plan do so and update as needed.

The plan must include customer identification procedures, including name, permanent address, social security number and ID verification.  Casinos must also keep track of all reportable transactions and have a policy on situations in which gamblers may be anonymous.  Casinos should know the source of the players’ funds because they must report on funds derived from illegal activity, she said.  Transactions with no apparent lawful activity must be reported, she said.

There is an expectation that casinos use all available information to meet their Title 31 obligations, Magnusen said, so compliance officers need to have access to player information.  The Players’ Club is the primary source of information on players, but casinos can also register for a Voluntary Information Sharing program authorized by the Patriot Act that allows them to share information with other registrants. Participation in this program, she said, has the advantage of providing the casino with a safe harbor.