U.S. AML Regulators Seek Guidance On Sharing Suspicious Activity Reports

January 27, 2022
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A new rule being proposed by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) would allow casinos to share suspicious activity reports with their foreign resorts, subsidiaries and affiliates to strengthen efforts to combat money laundering.

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A new rule being proposed by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) would allow casinos to share suspicious activity reports (SARs) with their foreign resorts, subsidiaries and affiliates to strengthen efforts to combat money laundering.

Under current federal law, those business units are ineligible for sharing.

The proposal earlier this week by FinCEN follows enactment of the Anti-Money Laundering Act of 2020, which became law in January 2021, requiring the agency to establish a pilot program that would allow casinos to share SARs with their affiliates.

As a condition of participation in the pilot program, casinos would be required to submit quarterly reports to the federal agency.

FinCEN will take public comment from gaming companies and other financial institutions on the proposal until March 28, according to a notice issued on Monday (January 24).

“I am encouraged by FinCEN’s recent outreach with respect to soliciting comments from the industry, most recently on SARs sharing,” said Greg Brower, chief global compliance officer with Wynn Resorts.

“I think that shows FinCEN’s good faith effort to become more knowledgeable about the details and nuances about how the gaming industry works.”

Brower reminded attendees at an hour-long webinar on Wednesday (January 26) that the gaming industry had a responsibility to work with FinCEN to help with that education effort.

He credited the American Gaming Association (AGA) with being able to interact effectively with FinCEN, but said that communication has to continue if “we are going to continue to improve a regulatory regime that makes sense for our unique business model.”

“I think the scrutiny will continue. We should welcome that and that’s just the reality going forward,” Brower said during the webinar, which was hosted by the International Association of Gaming Attorneys (IAGA).

Brower was joined for the discussion by Frank DiGiacomo, a partner with Duane Morris, and Vasilios Chirsos, a principal in PwC’s financial crimes unit.

The cost of suspicious activities reporting has been a concern for the gaming industry. FinCEN’s prospective pilot program could make it easier for gaming companies operating in multiple states and affiliates to identify illicit transactions.

The details of the pilot program will not be released until FinCEN issues a final rule shortly after the public comment period closes, but the initial response to the proposal from the AGA was positive.

“We are supportive of this initiative,” Alex Costello, the AGA’s senior director of government relations, told VIXIO GamblingCompliance. “For some time, we have been in favor of sharing SARs information within brands and partnership to enhance our already strong compliance.”

DiGiacomo said sharing of SARs is an issue that is not always black and white under the current requirements because there are online sportsbooks and gaming operators in certain states that operate through market-access deals with a local casino.

“So who has the obligation?” DiGiacomo asked. “Is it the casino? Is it the operator. Is it both collectively? Who can share what with who?

“We’ve had to deal with that issue and I don’t know if there is a right answer,” he said. “We’ve tried to navigate … where a state regulatory agency may request certain information of the operator but perhaps that information needs to be funneled back through the casino for which the operator has the betting skin.”

Those types of issue, DiGiacomo said, are in a grey area and further clarity, especially with SARs sharing and information sharing generally, would be very helpful.

“Clarity is always helpful,” Brower echoed. “What any regulated industry really wants from the regulator is clarity on what the law requires and what the regulator’s expectations are.”

Brower, a former deputy general counsel with the FBI, made it clear that regulatory scrutiny of the gaming industry, and particularly the new online sports betting side of the business, will only grow in the months and years ahead as regulators catch up with the realities of online gambling.

“Frankly, regulators are still trying to catch up with the old fashioned brick-and-mortar side of the business, because the [Bank Secrecy Act] started with application to traditional financial institutions and it has taken the regulators some time to catch up with the different realities of our industry.”

“So that is also a work in progress,” Brower said.

Brower said he spends an extraordinary amount of time on AML compliance within Wynn Resorts.

Wynn operates casino-resorts in Las Vegas, Boston and Macau and expects to operate WynnBET, its mobile sports-betting brand, in ten states by the end of the first quarter of 2022.

The Las Vegas-based gaming company also plans to open its first integrated resort casino in the United Arab Emirates in 2026, which will create further compliance challenges.

“Whether it is a focus on traditional brick-and-mortar operations or the new online operations, AML compliance is going to become more important,” Brower said. “It is just something that demands a lot of attention and resources.”

That increased scrutiny is just something the gaming industry is going to have to become used to.

“It is not going to change,” Brower said.

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