This is the first in a series of articles discussing the challenges faced by casinos - regarding both compliance with regulatory requirements and prevention of losses resulting from fraudulent theft. At the conclusion of this series of articles, we will be hosting a Webinar on the topic of Title 31 Compliance and offering a free download of a "Best Practices in Casino Regulatory Compliance" whitepaper.
Title 31: Compliance Challenges For Casinos
Casinos in the United States are overseen by, and must comply with, a confusing variety of overlapping regulations. Examples include:
1. The Bank Secrecy Act (BSA) "Title 31" 2. The Patriot Act 3. FACTA (Fair and Accurate Credit Transactions Act) 4. The Real ID Act 2005 (Red-Flag Rules, Customer Identity Program) 5. FTC-Privacy Section 5
In addition to the above federal legislative requirements, state and local regulations impose their own burdens and reporting regiments upon casinos and card clubs.
Compliance with most of the above regulations is centered on the casino verifying authenticity of the identity of the people gambling in their facility. Title 31, which is the most restrictive and demanding of these regulations, essentially requires casinos to manage customers the same way any bank or credit union must, including having both "Know Your Customer" and "Customer Identity Program" procedures in place.
By federal law, casinos must report both large currency transactions and suspicious monetary transactions. These regulations are described in Title 31 of the Bank Secrecy Act. They are intended to help federal authorities detect, deter and prevent criminal activity, especially money laundering. Beginning in 2003, the Department of the Treasury began to require casinos and card clubs to follow the same suspicious transaction reporting requirements that the nation's banks, thrift institutions, credit unions, broker-dealers, and certain money services businesses must follow.
Casinos and card clubs which have gross annual gaming revenues in excess of $1,000,000 are financial institutions subject to the requirements of the Bank Secrecy Act. Under Title 31, casinos are required to file Suspicious Activity Reports (SARs) when the casino knows, suspects, or has reason to suspect that a transaction (or a group of related transactions) involving $5,000 or more meets one of the following descriptions: • Involves funds derived from illegal activity or is intended to conceal funds derived from illegal activity; • Is intended to avoid or prevent the filing of a Currency Transaction Report for Casinos (CTRC); • Has no apparent business or other lawful purpose; • Is not the type normally expected from that particular customer; or • Involves the use of the casino to facilitate criminal activity. In addition to SARs, casinos are required to file Currency Transaction Reports (CTRs) to report a cash transaction (or related group of transactions in a single gaming day) exceeding $10,000. Before concluding any transaction with respect to which any of the above reports is required, casinos must verify the following information:
• Identity of the individual verified by drivers license, passport, social security card or other acceptable identity document; • Account number, if applicable; • Social security or taxpayer identification number • Verification of the identity of an individual who indicates that he or she is an alien or is not a resident of the United States must be made by passport, alien identification card, or other official document evidencing nationality or residence (e.g., a Provincial driver's license with indication of home address). • Verification of identity in any other case shall be made by examination of a document, other than a bank signature card, that is normally acceptable within the banking community as a means of identification when cashing checks for non-depositors (e.g., a driver's license or credit card). A bank signature card may be relied upon only if it was issued after documents establishing the identity of the individual were examined and notation of the specific information was made on the signature card. • Name and address of the individual presenting a transaction
Next in this series will be an article discussing how exposed casinos are to counterfeit fraud and the losses that result from phony payments.
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