FinCEN Keeping Card Clubs in Their Crosshairs

August 10, 2016

In another move reflecting its seriousness in holding card clubs accountable for anti-money laundering (AML) compliance failures, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has dealt a Californian card club a $2.8 million penalty. FinCEN alleges that the Hawaiian Gardens casino had several shortcomings, including failing to:

  • Implement and maintain an effective AML compliance program
  • Report large cash transactions
  • Maintain relevant records regarding game play
  • File a number of suspicious activity reports (SARs)

According to FinCEN, the club has admitted to violating the Bank Secrecy Act (BSA). The card club had also been investigated by the Internal Revenue Service (IRS) in 2011 regarding BSA compliance, and several violations were discovered. During a second investigation in 2014, the IRS found that the club had still not addressed the problems uncovered in 2011.

Investigations also revealed that Hawaiian Gardens staff had knowingly helped customers structure their transactions so as to avoid exceeding FinCEN’s reporting thresholds and thereby also dodging the requirement to file currency transaction reports (CTRs) with regulators.

In addition, the card club was found to have continued to maintain relationships with customers—even those who refused to provide identification—that the club itself had identified as suspicious. It’s been reported that in one case an individual was allowed to game even though 15 SARs had been filed regarding this person.

Card clubs restrict the games to cards and pit players against each other rather than the house. In recent years FinCEN has broadened its enforcement reach to card clubs and has begun cracking down.

The penalty against Hawaiian Gardens comes not long after FinCEN first flexed its muscle against card clubs in December 2015. In that case, the Oaks Card Club of California was fined $650,000 for willful violations of the BSA, including failing to file regulatory reports and giving employees incorrect information and instructions regarding the club’s BSA and reporting requirements.

In the coming months it is almost certain that more card clubs will begin to implement AML solutions to ensure they meet their compliance requirements. Our AML Compliance solution has Know Your Customer, transaction monitoring, sanctions list screening and automated regulatory reporting capabilities in a single platform, an ideal choice for card clubs, casinos and other gaming companies. Contact us to learn more.

About Andrew Simpson

Andrew Simpson (LinkedIn | Twitter) is Chief Operating Officer at CaseWare RCM and has more than 20 years of experience building businesses in the fields of information systems audit and security, data analytics, Anti-Money Laundering and forensics. He is a regular contributor to conferences and a recognized thought leader in financial crime management.

Try Alessa