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Title 31 - Strategy for Casino Fraud Prevention & Regulatory Compliance

Sean Trundy

Burden, or Benefit?

We approach the casino industry with a mentality that is, perhaps, a bit different from others in the industry. Many would say that casinos "must comply" with federal regulations, such as Title 31, FACTA and the BSA. They would also say that such compliance is, itself, a heavy burden on casino operations, creating high costs with no revenue "upside" and potentially damaging fines & penalties for failure-to-comply on the "downside". It's a "lose-lose" scenario under this way of thinking i.e. - "if we succeed, we get nothing, and if we fail - we get punished".

At Fraud Fighter, we view compliance as part of a larger strategy designed to protect the casino from financial losses resulting from individuals conducting fraudulent acts on their premises. Instead of a burdensome "must comply" attitude, we say, instead, that casinos should "enthusiastically comply" with Title 31 and other federal regulations that monitor and control financial transactions.

Who am I?

At the heart of Title 31, FACTA (Red Flags Rules), Know Your Customer, Customer Identification Programsage verification, and Suspicious Activity Reporting verify idrequirements lies the concept of identifying and confirming - with a high degree of certainty - that any person transacting in the casino is, in fact, who they say they are.

Utilizing a layered fraud prevention strategy in which identity documents can be tested throughout the operation, from hotel check-in, to restaurants, gift shops, nightclubs, gaming and cage transaction points enables the casino to know that individuals are not in their establishment under false identification. The immediate benefit of this from the fraud and loss prevention perspective should be obvious. Remove the ability to hide your real identity and you have created a very difficult environment for fraudsters.

The positive long-term effects of layering identity validation and authentication solutions across the casino operation will be many. First, the elimination of fraud losses resulting from casual transaction fraud, such as fake moneycounterfeit traveler checks and phony credit cards. Second, a severe decline in losses resulting from "credit fraud" wherein individuals apply for credit from the casino under another's stolen identity. Third, a significant reduction of the number of Suspicious Activity Reports that need to be filed, since the crack-down on identity authentication will become a "known" fact about your casino, and fewer attempts at financially suspicious transactions will be made.

The three above-listed effects are all "bottom-line" benefits to the operation. Every dollar of fraud-loss prevented goes direct to profits.

Layer-in the effect of achieving compliance with Title 31, FACTA Red-Flag rules, BSA, Gaming Commission, Alcohol & Beverage Control and other regulatory directives, and the opportunity to avoid costly audits, investigations and stiff fines or penalties improves the ROI calculation exponentially.

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