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Special Monitored Casino Cash Transactions
All businesses handling large amounts of cash are subject to federal regulations that monitor transactions to prevent customers or business partners from engaging in illegal activity, such as money laundering. Financial services institutions, such as banks, credit unions and securities firms, all fall under these rules.
In 1992, the Financial Crimes Enforcement Network (FinCEN), a law enforcement arm of the U.S. Department of the Treasury, was authorized by Congress to require financial institutions to file suspicious activity reports (SARs) to detect transactions that were suspected of being linked to criminal activity. Banks and credit unions began to submit SARs in April 1996, and the state of Nevada has required its casinos to file SARs since October 1997.

As part of the federal government's strategy to combat money laundering, FinCEN issued a proposed rule in May 1998 that would also require all casinos and card clubs to file SARs. Although no final action has been taken to implement the rule, a joint report released in September 1999 by the U.S. Treasury and Justice departments in the wake of Russian money-laundering allegations highlighted this proposed rule as a priority.

While transaction reporting requirements are not new for the casino industry, the proposed rule would set a different standard for casinos than for financial institutions. Banking institutions are required to report suspicious transactions of $5,000 or more. Under the proposed rule, casinos and card clubs outside Nevada would have a lower reporting threshold than banks, requiring them to report suspicious transactions of $3,000 or more.

In addition, the proposed language of the rule is vague, making it difficult to determine under what circumstances a report would be required. For example, the proposed rule would require a report to be filed if a casino 'knows, suspects or has reason to suspect' activities are suspicious. In contrast, the Nevada regulation requires casinos to file an SAR if 'in the judgment of the casino a specific act or transaction is suspicious.' The language of the proposed rule could lead to second-guessing of the casino's judgment, defensive reporting or overreporting, thus defeating the original intent of SARs to increase the efficiency of the reporting process.

Because the proposed rule places on the financial institution the burden of determining whether or not a transaction is suspicious, it would leave casinos and their employees open to potential liability. Some recent court decisions have suggested limitations on the immunity granted to financial institutions under the Bank Secrecy Act, raising the possibility that casinos could face lawsuits if they report patrons' transactions as 'suspicious.'

Another language problem in the rule would essentially compel casino employees to consider patrons guilty before proven innocent when conducting transactions. Under the current language, transactions with 'no business or other lawful purpose' are considered suspicious. Because casino patrons do not have 'business' purposes on a gaming floor, all transactions in a casino could technically be considered suspicious under this proposal.

Finally, the federal government already requires casinos to report cash transactions of more than $10,000. Currency Transaction Report by Casinos (CTRC) filings also have been used to report suspicious transactions.

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