- - Provides a detailed description of the suspicious activity.
- - Narrative should not state, "see attached."
- - Identifies "who," "what," "when," "why," "where," and "how."
- - Identifies whether the transaction was attempted or completed.
- - Is chronological and complete.
- - Identifies the dates of any previously filed Form 102 on the same subject.
- - Notes any actions (taken or planned) by the casino, including any internal investigative numbers used by the casino to maintain records of the suspicious activity.
For additional guidance on providing a clear and complete description of the suspicious activity, see FinCEN's Suspicious Activity Reporting Guidance for Casinos.
Question 18: Should a casino or card club document the basis for its determination that a transaction is not suspicious?
Answer 18: If a casino determines that an activity is suspicious, it must file FinCEN Form 102 (SARC). However, based on the available facts and after an initial investigation, a casino may determine that certain unusual activity is not suspicious. Although 31 C.F.R. § 103.21 does not specifically state that a casino or a card club must document the reasons why it has not filed FinCEN Form 102 for a particular activity that was reviewed as potentially suspicious, it is an effective practice for a casino or card club to document the basis for its determination that the transaction is not, after all, suspicious. 59
Thorough documentation provides a record of the decision-making process (including the final decisions not to file a SARC) which a casino or card club would find helpful to: (i) assist internal or external auditors and examiners in their assessment of the effectiveness of its suspicious activity reporting and monitoring and reporting system, (ii) assist its internal review committee 60 in making future decisions on what should be reported as suspicious, (iii) train employees about what transactions are suspicious and which are not suspicious based on all the relevant facts and circumstances, (iv) respond to a potential law enforcement subpoena pertaining to a particular customer whose activity was reviewed by the committee, but considered not to be suspicious, and (v) if it has multiple casino properties in the same jurisdiction, ensure that reasonably consistent suspicious activity reporting risk-based analysis procedures are being followed.
Section D: 31 C.F.R. § 103.36 Casino Recordkeeping Requirements
Question 19: What specific recordkeeping requirements apply to a casino?
Answer 19: 31 C.F.R. § 103.36 requires a casino or card club to maintain and to retain the following source records (either the originals or microfilm version, or other copies or reproductions of the documents) that relate to its operation:
- Records of each deposit of funds, account opened or line of credit extended, including a customer's identification and the verification of that identification as well as similar information for other persons having a financial interest in the account, regardless of residency;
- Records of each receipt showing transactions for or through each customer's deposit or credit account, including a customer's identification and the verification of that identification, regardless of residency;
- Records of each bookkeeping entry comprising a debit or credit to a deposit account or credit account;
- Statements, ledger cards or other records of each deposit or credit account, showing each transaction in or with respect to the deposit or credit account;
- Records of each extension of credit in excess of $2,500, including a customer's identification and the verification of that identification, regardless of residency;
- Records of each advice, request or instruction with respect to a transaction of any monetary value involving persons, accounts or places outside the United States, including customer identification, regardless of residency;
- Records prepared or received in the ordinary course of business that would be needed to reconstruct a customer's deposit or credit account;
- Records required by other governmental agencies, e.g., federal, state, local or tribal;
- A list of transactions involving various types of instruments, cashed or disbursed, in face amounts of $3,000 or more, regardless of whether currency is involved, including customer's name and address; and
- A copy of the compliance program required by 31 C.F.R. § 103.64.
Also, card clubs are required to maintain and to retain records of all currency transactions by customers, including, without limitation, records in the form of currency transaction logs and multiple currency transaction logs.
Besides the above casino-specific requirements, there are other BSA recordkeeping requirements that apply to all financial institutions, including casinos and card clubs, such as:
- Records by persons having financial interests in foreign financial accounts; 61
- Records of transmittals of funds in excess of $3,000 requiring the verification of identity, and the recording, retrievability and reporting of information to other financial institutions in the payment chain, regardless of the method of payment; 62 and
- Nature of records, record access, and five-year retention period for records. 63
Question 20: What computer records must a casino retain?
Answer 20: A casino or card club that inputs, stores, or retains, in whole or in part, for any period of time, any record required to be maintained by 31 C.F.R. §§ 103.33 or 103.36(a) and (b) on computer disk, tape, or other machine-readable media shall retain the records in such media. Also, a casino or card club is required to maintain the indexes, books, file descriptions and programs that would enable a person readily to access and review these computer records. These computerized records, source documentation and related programs must be retained for a period of five years. However, the BSA does not require that computerized records be stored in on-line memory in a computer past their normal business use. 64 Nonetheless, records must in all events be filed or stored in such a way as to be accessible within a reasonable period of time, 65 taking into consideration the nature of the records and the length of time since the record was made.
A casino may not delete or destroy specific computerized customer gaming activity information (prior to the end of the five-year retention period), such as player rating records, 66 and instead only retain the more limited trip history records (which only summarize the total funds from a customer's multi-day trip and the most recent trips, usually between three and nine trips). Because a trip includes any number of continuous days of gaming activity in which there is not a break in play, the player trip history is only a limited summarized record that typically does not provide all of the information contained on the original rating card, such as the specific amounts of the customer's currency transactions conducted for each gaming day.
Further, the retention of computerized records does not relieve a casino from the obligation to retain any record required to be maintained by 31 C.F.R. §§ 103.33 or 103.36(a) and (b), which typically are the source documents (either the originals or microfilm version, or other copies or reproductions of the documents) of customers' transactions.
Section E: 31 C.F.R. § 103.64(a) Compliance Program Requirements 67
Question 21: How comprehensive must an internal and/or external testing program be to assure and monitor compliance with the BSA?
Answer 21: A casino or card club must conduct internal and/or external testing for compliance with a scope and frequency commensurate with the risks of money laundering and terrorist financing it faces, as well as the products and services it provides, to determine if a casino's procedures are comprehensive enough to detect suspicious activity. 68
The primary objectives of the independent testing of the BSA compliance program are to determine whether: (i) the program is properly designed and operating effectively to comply with suspicious and currency transaction reporting, identification, recordkeeping, and record retention requirements; (ii) there are material weaknesses (e.g., inadequate training) and internal control deficiencies; (iii) testing of the program is based on risk assessment criteria designed to focus on money laundering and terrorist financing as well as the products and services provided; and (iv) there is adherence to BSA policy, procedures, and systems.
FinCEN is aware that some casinos conduct internal testing for BSA compliance on a regular basis as part of their annual internal audit plan. The testing provides an assessment of the level of BSA compliance. The internal audit report typically includes the scope, objectives, and findings of the audit as well as a response to any audit finding indicating the corrective action to be taken, the target date for completion, and the department head responsible for the corrective action. Other casinos and card clubs may hire independent certified public accountants for similar purposes.
A casino or card club needs to take corrective actions once becoming aware of weakness and deficiencies in its anti-money laundering compliance program, or any element thereof, that could or did result in failures to comply with BSA identification, reporting, recordkeeping, record retention as well as compliance program requirements. Violations of these regulatory requirements may result in both criminal and civil penalties.
Question 22: What type of compliance training program should be developed and what types of documentation should be maintained by a casino or card club to ensure that it has an adequate, accurate, and complete program?
Answer 22: One of the more important elements of the anti-money laundering compliance program is the obligation to institute an effective and ongoing training program for all appropriate casino or card club personnel. Such a compliance training program should be commensurate with the risks posed by the products and financial services provided. Training should be provided to all personnel before conducting financial transactions on behalf of a casino at the cage (including casino credit and slot booth), on the floor (including table games, keno, poker, other floor games, and slot machines/video lottery terminals), as well as those responsible for complying with BSA currency transaction and suspicious transaction reporting, identification, recordkeeping, and other compliance program requirements. Also, a casino or card club is required to maintain, and to retain, a copy of the compliance program documentation. This documentation should include all casino records, documents, and manuals substantiating the training program as well as the training of appropriate personnel. 69 The requirement is flexible and allows each compliance training program to depend on the characteristics of an individual casino. For example, a large casino having many table games, slot machines/video lottery terminals, and cage windows might need a more comprehensive training program than a small casino with no table games. A compliance procedures manual for employees should cover all applicable divisions or departments (e.g., table games, slot operations, keno, poker), other operational departments (e.g., cage operations, casino credit, slot booth), as well as other departmental functions (e.g., accounting, finance, information technology, marketing, surveillance).
Also, recordkeeping procedures should reflect the types of financial services provided. In addition, the training program should ensure that casino front-line employees, such as cage personnel (e.g., shift managers), cage cashiers, front window cashiers (i.e., general cashiers), pit personnel (e.g., pit bosses), floor persons (i.e., raters), dealers, and slot personnel (e.g., slot supervisors, slot attendants, slot cashiers, change persons) have appropriate training to detect the occurrence of unusual or suspicious casino transactions.
Question 23: What does the requirement mean that casinos that have automated data processing systems must use their automated programs to aid in assuring compliance?
Answer 23: Casinos are required to "develop and implement" written programs that are reasonably designed to assure BSA compliance with all applicable requirements. 70 Effective casino anti-money laundering compliance procedures should include identifying and using appropriate automated systems and programs 71 for all applicable gambling operating divisions or departments (e.g., table games, slots, keno, poker), other operational departments (e.g., cage, slot booth), as well as other departmental functions (e.g., accounting, surveillance) to comply with suspicious activity and currency transaction reporting, as well as to maintain relevant records 72 for casino accountholders. 73
Questions or comments regarding the contents of this Guidance should be addressed to the FinCEN Regulatory Helpline at 800-949-2732.
1 See 31 C.F.R. Part 103.
2 See 31 U.S.C. § 5312(a)(2)(X) and 31 C.F.R. § 103.11(n)(5)(i) and (n)(6)(i).
3 This includes casinos located in Commonwealth of Puerto Rico, St. Croix (U.S. Virgin Islands), and Tinian (Northern Mariana Islands). See 31 C.F.R. § 103.11(tt).
4 The Indian Gaming Regulatory Act is codified at 25 U.S.C. § 2701 et seq.
5 Slot machines, video lottery terminals, and house-banked table games would qualify as Class III gaming under the Indian Gaming Regulatory Act. Bingo and related games, including pull tabs, lotto, punch boards, tip jars, instant bingo and some card games, would qualify as Class II gaming under the Indian Gaming Regulatory Act.
6 See 61 F.R. 7054 - 7056 (February 23, 1996).
8 A similar conclusion would apply to "racinos" operating in tribal jurisdictions. Slot machines, table games, and similar forms of gaming would qualify as either Class II or Class III gaming under the Indian Gaming Regulatory Act.
9 The Nevada Gaming Commission issues "nonrestricted" gaming licenses to operators or owners of Nevada race book or sports pools. See Nevada Gaming Commission Regulation 22.020. A Nevada race book "means the business of accepting wagers upon the outcome of any event held at a track which uses the pari-mutuel system of wagering." See Nevada Revised Statute § 463.01855. A Nevada race book is a business that accepts wagers at fixed odds (or track odds) based on the outcome of the race that may be televised and displayed in Nevada casinos (i.e., "simulcasting"). A Nevada sports pool "means the business of accepting wagers on sporting events by any system or method of wagering." See Nevada Revised Statute § 463.0193. A Nevada sports pool is a business that accepts wagers at fixed odds based on the outcome of certain professional and amateur athletic sporting events that may be televised and displayed in Nevada casinos.
10 A Nevada "nonrestricted license" includes, among other things, ". . . A license for, or operation of, any number of slot machines together with any other game, gaming device, race book or sports pool at one gaming establishment." See Nevada Revised Statute § 463.0177(2). In addition, Nevada Revised Statute § 463.245(3) provides an exception to the prohibition against having more than one licensee issued to each casino. Also, see Nevada Gaming Commission Regulation 22.010(4).
11 See 61 F.R. 7054 - 7056 (February 23, 1996).
12 We have already addressed a situation in which an establishment operating in a tribal jurisdiction offers off-track betting on horse races and other Class III gaming. See In the Matter of the Tonkawa Tribe of Oklahoma and Edward E. Street - FinCEN No. 2006-1 (March 24, 2006).
13 This discussion addresses off-track betting in Nevada and tribal jurisdictions only. Off-track betting may not require a gaming license in other jurisdictions. The definition of "casino" includes only those establishments licensed or authorized to conduct business as casinos.
14 See 61 F.R. 7054 - 7056 (February 23, 1996).
15 A greyhound racing club is a gaming establishment that offers the sport of racing greyhounds. Specially trained dogs chase a lure (which is an artificial hare or rabbit) around an oval track until they arrive at the finish line. The dog that arrives first in each event is the winner of the bet.
16 See 31 U.S.C. § 5312(a)(2)(X) and 31 C.F.R. § 103.11(n)(6)(i). The class of gaming establishments known as "card clubs" became subject to the BSA as of August 1, 1998. See 63 F.R. 1919 - 1924 (Jan. 13, 1998).
17 See 61 F.R. 7054 --7056 (February 23, 1996).
18 See 31 C.F.R. § 103.22(b)(2) and (c)(3).
19 See 31 C.F.R. § 103.64(a)(2)(v)(A).
20 However, FinCEN does recognize that for certain aggregate currency transactions, a casino may not be able to obtain the required customer identification information because either the customer has left the casino and is no longer available or a casino does not have internal records which provide all of the required customer identification information.
21 See 31 C.F.R. § 103.64(a)(2)(vi).
22 See 31 C.F.R. §§ 103.22(b)(2) and (c)(3), 103.27(a) and (d), and 103.28. Also, see FinCEN Form 103, Specific Instructions, Item 1, for filing an amended report.
23 Coin-in is a metered count of coins, credits and other amounts bet by customers at an electronic gaming device. Coin-out is a metered count of coins, credits and other amounts paid out to customers on winnings at an electronic gaming device. Therefore, coin-in does not include paper currency inserted into a bill acceptor (on slot machine or video lottery terminal) to accumulate credits.
24 See 31 C.F.R. §§ 103.22(b)(2)(i)(I), (b)(2)(iii)(C), and (c)(3), and 103.64(b)(3) and (4).
25 See 31 C.F.R. §§ 103.21 and 103.64(a)(2)(v)(B).
26 See 31 C.F.R. § 103.64(a)(2)(vi).
27 Furthermore, as discussed in FinCEN Ruling 2005-1, measures that a casino could implement in response to a risk-based suspicious activity analysis could include enhancements to the operating system for slot machines. The enhancements could consist of new software tools/interfaces and reprogramming. A casino could develop the enhancements or have a vendor develop the enhancements.
28 See 31 U.S.C. § 5321(a)(1) and 31 C.F.R. § 103.57(f).
29 See 31 C.F.R. § 103.22(b)(2)(i)(E).
30 See FinCEN Administrative Ruling FIN-2006-R002, A Cash Wager on Table Game Play Represents a "Bet of Currency" (March 24, 2006).
31 Nonetheless, when a customer increases a subsequent cash bet (i.e., money play) at the same table without departing, the increase in the amount of the currency bet would represent a new bet of currency and a transaction in currency being monitored by a casino.
32 See 31 C.F.R. § 103.22(b)(2)(iii)(B) and 72 F.R. 35008 (June 26, 2007).
33 See 31 C.F.R. § 103.36(b)(11).
34 The card clubs operate or run the games and earn their revenue by receiving a fee from, rather than "banking," the games as casinos do. See 63 F.R. 1919 - 1924 (January 13, 1998). 31 C.F.R. § 103.116(n)(6)(i) defines a card club as a card club, gaming club, card room, gaming room, or similar gaming establishment.
35 See 31 C.F.R. §§ 103.22(b)(2) and (c)(3), 103.28, and 103.64(a)(2)(i) and (b)(3) - (4).
36 See 31 C.F.R. § 103.64(a)(2)(v)(A).
37 A propositional player is a natural person employed by a casino or card club to play a permissible game with his or her personal funds. A propositional player is paid a fixed sum by a casino or card club for playing in a poker/card game and retains any winnings and absorbs any losses. Also, a propositional player's function is to start and gamble at a poker/card game, to keep a sufficient number of players in a game, or to keep the action going in a game. Some card rooms have entered into contractual agreements with so-called "third party provider[s] of propositional player services" to exclusively bank poker/card games as independent contractors, which introduces issues with assuring day-to-day BSA compliance with maintaining currency and cash equivalent records. An individual employed by such a service is called a "third party propositional player" who gambles with funds provided by such a service.
38 See 31 C.F.R. § 103.38(b).
39 See 72 F.R. 35008 (June 26, 2007).
40 See 31 C.F.R. § 103.64(a)(2)(i).
41 Typically, these records contain the original method of identification (including type, number and expiration date, of the customer's identification credential originally examined) and the date of such examination as well as a photocopy or other reproduction (e.g., a computerized representation) of the identification credential. Some casinos maintain hard copy internal records and others digitized records containing identification information on a known customer.
42 See 31 C.F.R. §§ 103.64(a) and 103.120(d).
43 Types of casino accounts that would be subject to suspicious activity reporting include deposit (i.e., safekeeping, front money or wagering), credit, check cashing, player rating or tracking, and slot club accounts.
44 See 31 C.F.R. § 103.64(a)(2)(vi).
45 See 31 C.F.R. § 103.64(a)(2)(v)(B).
46 See 31 C.F.R. § 103.64(a)(2)(iii).
47 See 31 C.F.R. § 103.64(a)(2)(v)(B).
48 See 31 C.F.R. §§ 103.22(b)(2)(ii)(A) and (c)(3), and 103.64(b)(4).
49 Almost all casinos maintain multiple transaction logs ("MTLs") pursuant to state, tribal or local laws, or as unique business records. Casinos or card clubs record on these logs only currency transactions above a given threshold, usually $2,500 - $3,000. Also, some casinos have enhanced the existing MTL compliance procedure to require a surveillance photograph of each "unknown" customer to assist in identifying customers for purposes of aggregating transactions for currency transaction reporting as well as potential suspicious transaction reporting.
50 See 31 C.F.R. § 103.64(a)(2)(i).
51 Casinos and card clubs maintain cages where cashiers conduct financial transactions using a drawer that operates on an imprest basis or inventory. An imprest basis is a method of accounting for funds inventories whereby any replenishment or removal of funds is accounted for by an exchange of an exact amount of other funds in the inventory. The imprest drawer opens with a stated amount of currency and/or chips. Any subsequent additions or removal of funds in the drawer are accounted for by either a document or an exchange of an equal amount of funds of another form. Since chips and currency are fungible items no imprest records of these transactions are prepared or maintained.
52 For example, a known customer with a casino deposit (i.e., safekeeping, front money or wagering), credit, check cashing, player rating/player tracking, or slot club account.
53 See 31 C.F.R. §§ 103.21 and 103.64(a)(2)(v)(B).
54 A betting ticket is a written record of a wager for a race or sporting event. It is printed with a unique ticket number and is used to record the event for which the wager was placed. It includes the name of the gambling establishment, race or sport event (e.g., race track, race number, horse identification), the amount of the wager, line or spread, and date and time. The gambling establishment provides a copy of the betting ticket to a customer and maintains a record of it.
55 A token is a gaming instrument or coin issued by a casino at certain stated denominations as a substitute for currency and used to play certain slot machines or video lottery terminals. Tokens are most often used for denominations of $1.00 or greater. Tokens represent a monetary value only within the casino and are intended for the purposes of gambling.
56 Slot machines or video lottery terminals that print tickets are commonly known as "ticket in/ticket out" or "TITO" machines. A TITO ticket is a gaming instrument issued by a slot machine or video lottery terminal to a customer as a record of the wagering transaction and/or substitute for currency. Tickets are voucher slips printed with the name and the address of the gaming establishment, the stated monetary value of the ticket, date and time, machine number (i.e., asset or location), an 18-digit validation number, and a unique bar code. Tickets are a casino bearer "IOU" instrument. A customer can use a ticket at a machine or terminal that accepts tickets, or cash a ticket at a cage, slot booth, a redemption kiosk, or a pari-mutuel window at the gaming establishment.
57 31 C.F.R. § 103.38(b) states that "records required by this subpart to be retained by financial institutions may be those made in the ordinary course of business by a financial institution. If no record is made in the ordinary course of business of any transaction with respect to which records are required to be retained by this subpart, then such a record shall be prepared in writing by the financial institution."
58 See 31 C.F.R. § 103.38(d).
59 See FinCEN's Suspicious Activity Reporting Guidance for Casinos, December 2003, page 4.
60 Many casinos have an internal SARC review committee.
61 See 31 C.F.R. § 103.32.
62 See 31 C.F.R. § 103.33(f) and (g).
63 See 31 C.F.R. § 103.38.
64 For example, for casinos that maintain computerized records, such as daily player rating records, markers issued records, and cage voucher records for each customer deposit, deposit withdrawal and marker redemption, they may store such information on-line in computer memory or in off-line storage media, such as magnetic tape, magnetic disk, magnetic diskette, CD-ROM disk, etc.
65 See 31 C.F.R. § 103.38(d).
66 See 31 C.F.R. §§ 103.36(b)(8) and 103.36(c), and F.R. 1165 - 1167 (January 12, 1989).
67 See 31 C.F.R. §§ 103.64 and 103.120(d).
68 See 31 C.F.R. § 103.21.
69 Such training program documentation would include any course outlines, the dates that training was provided, names of personnel who received training, any test that was administered, and the test results to allow internal and/or external examiners to evaluate the effectiveness of each training session.
70 See 31 C.F.R. § 103.64(a)(1).
71 This would include gaming computer systems or other computer systems that interface with systems that track, control, or monitor customer gaming activity (e.g., a casino management system, a casino marketing system, a customer master file system, a credit management system).
72 See e.g., 31 C.F.R. §§ 103.21, 103.22(b)(2) and (c)(3), 103.33(f) and (g), and 103.36.
73 Many companies have developed casino management system software capable of identifying and aggregating customer transactions that are associated with casino accounts such as deposit (i.e., safekeeping, front money, or wagering), credit, check cashing, player rating or tracking, or slot club.
