The director of the Financial Crimes Enforcement Network, Kenneth A. Blanco, reminded casinos to comply with the agency’s guidelines about suspicious CVC or convertible virtual currency activities. This is especially the ones that are related to digital currencies.
FinCEN’s director talked about the two areas where CVC intersects with casinos and card clubs. Both online and physical casinos that accept CVC for gaming should consider how they will conduct due diligence on CVC transactions.
Blanco spoke about the issues concerning this last August 13 at the 12th Annual Las Vegas Anti-Money Laundering Conference. He also mentioned that FinCEN has already considered the use of specific business models that involved CVC financial institutions to help them comply with their obligations under the BSA or Bank Secrecy Act.
However, these models just didn’t establish any requirements and new regulatory expectations. This is why the director also said that casinos, both online and physical, should consider how they will go through due diligence when it comes to their CVC transactions involving cryptos.
These businesses, like the Australian casinos that accept Bitcoin and other cryptos, are also expected to incorporate CVC-related indicators into their SAR fillings. What FinCEN wants to address is the gap in reporting made by casinos when it comes to this matter. He urges casinos to check the documents that contain how FinCEN is dealing with the industry of gambling and its interactions it has with other financial sectors.
The documents can be found on FinCEN’s website. It also states that these casinos should have SARs the moment they encounter suspicious CVC activities or transactions. This was deemed very important because Blanco reported that their agency hasn’t received the number of suspicious reports they were expecting.
Blanco just wants to make sure that the misconception about FinCEN not having any enforcements against a casino or card club is debunked. He assured that it isn’t the case even if they didn’t have anything like it in the past year.
They need these casinos to make sure that they have policies, procedures, protocols, internal controls, and assessments particular to crypto assets. These casinos should have something in place in case anything suspicious comes out.
Proper financial monitoring in the US concerns national security and this is why the reports or SARs from these casinos should be more robust. The way the casinos should monitor such suspicious acts should be comprehensive and very technical.
Questions like how blockchain analytics will be conducted and how to incorporate crypto-related indicators into their SAR filings should be asked. He also expects that the compliance officers from these casinos are very familiar with the requirements from their agency.
Not only one department should be aware and be working on this, however. Blanco urged casinos to make sure that multiple departments like legal, IT, and even compliance are involved when it comes to enhancing a casino’s risk management.
When it comes to the highest reported suspicious activities, Minimal Gaming with Large Transactions appears to be on top. It was reported that more than 5000 SARs that concern this activity was filed since 2018.
Chip Walking has also significantly increased since the summer of 2018. Chip walking is basically purchasing of gambling chips that are left unclaimed as they are used to pay employees who are working in underground businesses. This is the second most reported suspicious acts from casinos with over 4,400 SARs.
The BSA data can also aid investigations about bulk cash smuggling, gang activity, fraud, transnational organized crime, embezzlement, money laundering, and many other crimes that may be a threat to the national security. This should also include cryptos.
Ending his piece, Blanco said that both online and land-based casinos are legally bound to make sure that that they have the integrity when it comes to monitoring and reporting suspicious activities that are challenging the national security.
He reminded these casinos that he wasn’t stating these facts just to urge casinos. He wanted to remind these casinos that everything he and his firm is urging them to do is rather a requirement under the AML program rule for casinos and card clubs.
FinCEN wants to make it clear that they take the culture of compliance seriously. Filing of SARs is simply important and concerns the issue of national security. This shouldn’t be taken lightly by anyone else, especially by these casinos.
They need all casinos to comply and not limit or prevent law enforcers to efficiently and effectively conduct investigations about suspicious activities. What they do not want is to have bad people hiding from justice as they continue doing the bad.
This article was submitted by Dylan Moran
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