CDC Gaming Reports – When it comes to anti-money laundering compliance compliance, the best defense remains a good offense for casino industry

December 5, 2016

December 5, 2016 

By John L. Smith 

Whether you consider it a clear sign of maturity, or adherence to the adage that “the best defense is a good offense,” the gaming industry just got some good news from the Financial Action Task Force on a sore and at times extremely embarrassing subject: anti-money laundering compliance.

The independent FATF, in its 2016 analysis, provided the industry something akin to a “most improved” medal for stepping up its AML compliance in recent years. A decade ago, FATF called out casino gaming for falling far short of embracing AML compliance, the requirements of the Bank Secrecy Act, and the regulations set forth by the Nevada Gaming Commission.

More than one gaming company, if it were being candid, would have had to admit its super-aggressive marketing in the past not only attracted attention from the U.S. Department of Justice, but also caused scandals which effectively slimed the whole industry. In most legitimate and regulated enterprises, stories about catering to a representative of the Sinaloa drug cartel and doing business with members of Asian organized crime Triad members are considered bad for one’s image.

Enlightenment has, shall we say, been strongly encouraged by Financial Crimes Enforcement Network (FinCEN) Director Jennifer Shasky Calvery. That included a speech before the American Gaming Association in Las Vegas in which she called out some of the industry’s most powerful elements for their failure to get with the program. (With Shasky Calvery’s departure from FinCen in May of this year and the election of a casino industry-friendly President Trump in November, it will be intriguing to watch for any changes in AML priorities in Washington.)

The periodic FATF evaluations provides a baseline used by governments, law enforcement, and private industry on the subjects of money laundering and terrorist financing. For an image-obsessed industry, it’s no place to look bad. The AGA wisely went on the offensive; in 2014 it produced its “Best Practices for AML Compliance,” a document which acknowledges the industry’s obvious challenges and set a path forward for the two years before the FATF update was due to be published.

“It’s no accident that FATF’s evaluation of the casino gaming industry greatly improved from 2006 to 2016,” AGA president and CEO Geoff Freeman said in a statement. “We’re proud of the incredible strides the industry has made not only since FATF’s report of the gaming industry 10 years ago, but in the last three years as we’ve built a partnership with the federal government that serves as a model for other industries.”

There’s no question the best defense is a good offense. The casino industry looks much better in 2016 than it did in 2006. The FATF report acknowledges the casino industry’s investment in AML compliance and noted it “has a good understanding of risks and obligations,” even allowing that some of its efforts exceed the requirements of the Bank Secrecy Act.

And the issues far exceed the relative health of one corporate casino giant’s bottom line. If you care anything about the battle against organized crime and terrorism, or for that matter about the relationship between nations, then tracking the illicit movement of ill-gotten wealth is an essential part of the discussion.

But before we pull out the hats and party horns and pop a few corks in celebration, some perspective: For the casino industry, AML compliance is a work in progress — and should remain so. “Understandably, casinos do pose certain money laundering vulnerabilities given the intensity of currency transactions,” former Las Vegas IRS Criminal Special Agent in Charge Paul Camacho wrote recent in the ACAMS magazine.

“That said,” reports Camacho, the vice president of AML compliance for Station Casinos, LLC, “the U.S. Treasury’s 2015 National Money Laundering Risk Assessment indicates that criminals have not gravitated to casinos over traditional and nontraditional financial institutions. Casinos were not even mentioned in Treasury’s 2015 National Terrorist Financing Risk Assessment.”

That’s more good news and a reminder that going on the offensive can generate real results.

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