Although members were expected back in Washington, D.C., this month and perhaps again in December for a lame-duck session to wrap up some unfinished business on priority issues such as homeland security and appropriations matters, legislation affecting the gaming industry was not expected to be on the agenda. For obvious reasons, the past two years in Washington will be remembered for their focus on legislation and regulation with a potential national security angle.

In this new environment, a rule requiring suspicious activity reports (SARs) by casinos received renewed attention. This proposed rule, issued by the Financial Crimes Enforcement Network, or FinCEN - a law enforcement arm of the U.S. Treasury Department - had undergone a lengthy public comment period that began in 1998. There seemed little impetus to finalize the rule until Sept. 11, when the U.S. government - and the American public - felt a greater sense of urgency to put in place safeguards that might limit potential sources of money laundering. In September of this year, a final rule was issued, giving casinos 180 days to comply. 

Since the proposed rule was first issued in 1998, the American Gaming Association (AGA) and other industry representatives - particularly Bob Faiss of Lionel, Sawyer & Collins, who serves on FinCEN’s Bank Secrecy Act Advisory Group - had worked closely with FinCEN to share our views on the proposed rule. Our comments focused on the areas of greatest concern to our industry: 1) an “objective” vs. “subjective” standard; and 2) a $3,000 vs. $5,000 reporting threshold.

The original intent of the proposed rule was to create a process that was more cost-effective than the current system, which requires casinos to file currency transaction reports (CTRs) for all transactions exceeding $10,000. Instead of filing reports for all transactions, the proposed rule would shift the responsibility onto the financial institutions (i.e., casinos) to determine whether or not a transaction is suspicious. Unfortunately, the proposed rule recommended use of an “objective” standard to determine whether or not an activity could be considered suspicious. The “objective” standard states that a report is required if a casino “knows, suspects, or has reason to suspect” activities are suspicious. We expressed our concern to FinCEN that this standard could lead to second-guessing of the casino’s judgment, defensive reporting, or over-reporting, thus defeating the original intent of the new system. We preferred the “subjective” standard currently in place in Nevada and New Jersey, which requires casinos to file a report if “in the judgment of the casino” a specific act or transaction is suspicious.

The industry also argued that the rule should not establish a threshold level for reporting that was lower than the amount for other financial institutions, which already are required to submit SARs using a $5,000 threshold. Ultimately, the final rule incorporated the industry’s recommendation on threshold requirements but opted for the “objective” standard.

Despite these differences - and the fact that there is almost no evidence of money laundering at casinos - our industry recognizes that the new post-Sept. 11 environment requires additional sacrifices by everyone, and we are committed to joining with other financial services companies in taking all reasonable steps to ensure that our businesses are not used to support terrorism or any other illegal activity. The AGA currently is preparing new guidelines to help our members comply with this new federal rule regarding SARs. For more information, send an e-mail to the AGA [1].

Adapting to Change: Outlook for the 108th Congress

At press time, we didn’t yet know the answers to some critical questions: Will the Democrats continue to control the U.S. Senate? Will Republican control continue in the U.S. House of Representatives? By what margin will either party control these bodies? Who will serve as chairman of committees that handle gaming-related bills, responsible for setting the panel’s legislative priorities? By now - barring another voting debacle - we know many, but not all, of these answers.

Regardless of the political climate in our nation’s capital, or the turmoil occurring around the world or in our own backyard, there are certain realities that will always face us: Not enough public officials understand our business. Our charge, as a result, is to educate members of Congress, congressional staff, regulators and others in Washington about our industry. In support of that effort, there is a constant need for data. We believe we’re developing an important resource to address that need with our new Gaming Legislative Impact Program.

This program, which began last spring, involves the gathering of companywide data on employees, customers, facilities, wages, charitable contributions, local purchases of goods and services, and other measures of our industry’s impact in a community. Once the information gathering is complete, this data will be aggregated and then sorted by state and congressional district so we can demonstrate the importance of our industry to a particular senator or congressman. Participating companies will be able to obtain handout materials for their own lobbying purposes, showing both their company’s and the industry’s economic impact; interactive industrywide information also will be available on the AGA’s Web site.

If you are responsible for the management of a commercial casino company in the United States and your company is not already involved in the Gaming Legislative Impact Program, we hope you’ll consider joining the effort. If you are interested in participating, or you have questions about the program, send an e-mail to the AGA [1].