Exclusive: U.S. to require casinos to vet high rollers' funds - sources

ST. LOUIS (Reuters) - U.S. casinos may soon have to vet where their high rollers’ funds come from under a requirement being developed by the U.S. Treasury Department, according to two people familiar with the matter.

People play at slot machines inside Resorts World Casino, owned by Malaysian gaming company Genting, in the Queens borough of New York, November 22, 2013. REUTERS/Shannon Stapleton

The move is part of a push to address longstanding regulatory and law enforcement concerns that criminals can use casinos, which have not historically been as closely monitored as banks for compliance with anti-money laundering laws, to convert proceeds of crime into money that appears clean.

Under current law, casinos are required to report suspicious activity. A customer who used a large sum of cash to buy chips, gambled briefly, and then asked to cash out with a casino check, for example, would likely get reported to authorities.

But existing rules do not explicitly require casinos to vet the source of gamblers’ funds.

The new rule, which is being considered by Treasury’s Financial Crimes Enforcement Network (FinCEN) unit and would make such obligations explicit, is in the early stages and may take a year or more to complete, the people familiar with the proposal said.

The rule is likely to require casinos to get more information about certain customers in order to shed light on high-risk transactions such as international wires and large cash deposits, said the sources, who asked not to be named.

FinCEN spokesman Steve Hudak declined to comment on “any potential rule making,” but said the Treasury bureau “continually examines its rules, and periodically considers updates, to ensure their continued effectiveness”.

A spokeswoman for a casino trade group, the American Gaming Association, said the group is engaging regularly with FinCEN, but declined to comment on any specific discussions.

“Our industry is committed to a culture of compliance and we appreciate FinCEN’s open dialogue and look forward to future collaboration,” Stephanie Chan said.


Even though the agency has not yet publicly discussed any rule proposal, FinCEN officials have in recent months stepped up their outreach to the industry.

In September, FinCEN director Jennifer Shasky Calvery delivered a strongly worded message at a gaming industry conference.

“When some casinos say that probing their customers about their activities outside of the casino will drive customers away, I sense that they feel that it is not their responsibility to protect their institutions, and our financial system as a whole, from being used by illicit actors,” Shasky said.

“You ask your customers many questions about their preferences; you can and should get information about their sources of funds to meet your obligations to identify and report suspicious activity,” she added.

In August Las Vegas Sands Corp agreed to pay the Justice Department more than $47 million over anti-money laundering lapses at its Venetian and Palazzo hotel complex in Las Vegas.

FinCEN is also investigating possible compliance lapses at other Las Vegas casinos, the two sources said.

“There is a sea change afoot with respect to casinos and U.S. government focus on them because there is just so much money that moves through casinos,” said Kevin Rosenberg, a former federal prosecutor in Los Angeles who pursued the Sands case and is now in private practice. “The message is ‘You’ve got to get a lot better than you have been.’”

Reporting by Brett Wolf of the Compliance Complete service of Thomson Reuters Accelus; Editing by Randall Mikkelsen and Stephen Powell