In Anti-Money Laundering

FinCEN Cracking Down on Casinos

With an extensive history and an international reputation of being potential hub’s for money laundering activities, casinos and the gaming industry in general have long been targeted by financial criminals and drug traffickers attempting to make their illegal money-trails go cold. However, in recent years the Financial Crimes Enforcement Network (FinCEN) has been paying increased attention to the wealth of casinos across the United States, urging them to stay compliant with the most current AML regulations that are in place. By doing so, FinCEN is attempting to render these casinos less vulnerable to the possibility of illegal financial activity occurring under their respective roofs. However, even with the threat of criminal charges and financial penalties facing these institutions, a global trend has emerged which has seen casinos avoiding regulatory compliance activities due to the large amount of revenue that is being brought in to their institutions.

According to the article “FinCEN Keeping a Close Watch on Las Vegas Casinos After Fresh Reports of Money Laundering”, cited in BSA News Now on October 6th, 2016, several investigations into compliance failures within a number of notable Las Vegas casinos have resulted in large monetary fines for the institutions involved, with the writer discussing some of the most prominent recent cases. The article states that “the U.S. Justice Department concluded after an investigation in 2013 that the Las Vegas Sands Corporation had allowed Chinese-Mexican drug lord Zhenli Ye Gon to spend more than $84 million at the Venetian casino without properly following anti-money laundering regulations, and as a result hit the Las Vegas Sands Corp. with a $47 million fine” (Renee, 2016). In a separate case, FinCEN imposed a fine in excess of $8 million on Caesars Entertainment Corporation in 2015 for the organization’s failure to follow AML regulations in regards to allowing VIP players gambling at Caesar’s Palace to conceal their identities, as well as their high-value transactions.

Perhaps the most shocking case once again involves the Las Vegas Sands Corporation, which has seen the institution take two “VIP” Chinese gamblers to court for their failure to pay back approximately $6.4 million worth of gambling debt. However, the case took a twist when the attorney’s representing these “VIP gamblers” stated that the women were actually housekeepers that were privately hired by the corporation to act as front’s for the insertion of large amounts of casino money into the tables at which actual VIP gamblers were playing, and also to sign over “IOU’s” for Sands Corp. to capitalize on. In gambling, “a losing bettor may ask for a special IOU called a marker to ensure repayment to the casino. Periodically, the casino or other lender may decide to collect on this marker, especially if the gambler happens to win a large sum of money elsewhere” (WiseGeek, 2016). Sands Corp. is alleged to have had knowledge of the operation, which occurred at two of their more prominent properties, the Venetian and the Palazzo Hotels and Casinos. The attorney’s for the women involved have implied that “the Venetian/Palazzo’s conduct may have run afoul of federal criminal anti-money laundering laws” (Renee, 2016). Representatives for Las Vegas Sands Corporation have since vehemently denied these allegations and the result of the trial is still pending.

With the increasing amount of cases arising against United States casinos of late, FinCEN is wise to pay particular attention to this sector.

Brexit & the Financial Services Industry

With the result of the United Kingdom’s June 2016 referendum to leave the European Union (EU), there has come a fair amount of speculation into how this revolutionary change will affect the financial services industry within the EU, as well as in the UK and its territories. The article “Brexit: The Fall-Out”, cited on BSA News Now on September 30th, 2016, speaks on the legal and constitutional implications of the loss of the UK by the EU, as well as the effects on the development of EU regulations and legislation involving the financial services industry.

Exercises to meet the pressing need for a common external strategy for effective taxation within the European Union are being performed both by the legislative powers within the EU and the Organization for Economic Cooperation and Development (OECD). The OECD has based their exercise on objective criteria, including “compliance with the OECD’s standards for the exchange of tax information, on which UK crown dependencies and the British Virgin Islands rank highly” (Bell, 2016). However, with the lack of UK input on the subject, many surmise that these practices will become an “attack on low-tax jurisdictions” which could be problematic for the British Virgin Islands “despite its full compliance with OECD transparency requirements and the Financial Action Task Force’s (FATF) anti-money laundering and terrorist financing standards” (Bell, 2016).

The British exit from the EU, termed “Brexit”, is likely to cause economical consequences such as delayed investments by businesses due to the large amount of market uncertainty, and has already resulted in the loss of Britain’s top AAA credit rating, which will increase the cost of future government borrowing as well. On the other hand, businesses and fund managers that thrive on market volatility have the opportunity to capitalize on the uncertainty of the situation. Additionally, share prices have steadily recovered since the announcement of the withdrawal, with the FTSE 100 and FTSE 250 index trading at a higher rate than before the referendum. Esteemed writer Oliver Bell concludes his article by asserting that, “While the British Virgin Islands has strong economic ties to London, its vehicles are used throughout the United States, Asia, Africa, and South America” (Bell, 2016). That being said, the slowdown in work that originated from the United Kingdom will not have a significant effect on the financial services industry in the British Virgin Islands.

The United Kingdom has two years to agree to the terms of its withdrawal from the European Union under Article 50 of the Lisbon Treaty. With 27 national parliaments having to agree upon the exit terms and with no precedent to base the negotiations off of, the process will take a substantial amount of time and effort to complete. In the meantime, EU laws and treaties will continue to stand in the United Kingdom until the UK ceases being a member, but the UK will not take part in any of the decision-making activities within the EU.

 

 

Sources:

Bell Citation – http://clclp.me/4EHp

Renee Citation – http://www.tightpoker.com/news/fincen-keeping-a-close-watch-on-las-vegas-casinos-after-fresh-reports-of-money-laundering-7571/

Wise Geek Citation – http://www.wisegeek.com/what-is-an-iou.htm

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Mr. Christopher J. Pelaez is a Staff Writer and Operations Specialist for Global RADAR. His background consists of experience as both a BSA and marketing consultant, with an education based in law. Always on top of all the latest in the world of AML/BSA, Mr. Pelaez also curates the well-known Global RADAR news service, BSA News Now.
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