The Financial Crimes Enforcement Network ("FinCEN") announced today a substantial civil monetary penalty against a California-based casino for anti-money laundering ("AML") violations.
FinCEN determined that Artichoke Joe's Casino ("AJC") failed to implement and maintain an effective AML program, and failed to timely detect and report suspicious transactions. FinCEN concluded that AJC's AML program was incomplete and contained numerous gaps, including that the casino's written compliance program failed to address high-risk activities, such as pooled betting.
Further, FinCEN found that AJC violated the Bank Secrecy Act requirement that casinos use "all available information" to identify suspicious activity. As an example, FinCEN determined that AJC failed to assess relevant information in the possession of certain employees or independent contractors whom the casino paid to initiate or encourage gaming in the casino. FinCEN stated that AJC policies did not provide for a method to incorporate such information into its AML processes.
The role of the employees as well as AJC's failure to use the information was particularly relevant since the FinCEN assessment followed racketeering convictions of two AJC customers for loan-sharking activities at the casino. FinCEN noted that AJC employees had reported loan-sharking activity to law enforcement authorities, but that AJC had not filed suspicious activity reports in response. FinCEN also noted that, even when AJC had the information needed to properly file suspicious activity reports about cash-related transactions, the casino frequently failed to file corresponding currency transaction reports, or failed to state that both types of reports related to the same transaction. FinCEN found that the casino's policy-related and procedural shortcomings and failure to conduct independent testing contributed to an environment that allowed for the proliferation of loan-sharking and other criminal activity.
As a result of the alleged misconduct, FinCEN imposed an $8 million civil monetary penalty against AJC.
Commentary / A. Joseph Jay
FinCEN's action against AJC should remind all financial institutions about the need to be vigilant in their BSA and AML compliance programs. Among the lessons learned from this action are: (1) FinCEN's continued focus on non-bank financial institutions (like casinos and money service businesses); (2) the criticality of comprehensive AML compliance programs that are based upon an individualized risk assessment; and (3) the importance of identifying and reporting suspicious transactions.
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