CRIME AND PUNISHMENT
Gushin says, “To uncover suspicious activity, member nations have implemented individual regulations, consistent with the Directive, for types of games, ownership and controls. Regulated jurisdictions have established proactive money laundering controls. I see distinct correlations between jurisdictions with the fewest controls and the worst money laundering problems.” While Southeastern Asia nations like
Vietnam, Cambodia, Burma and Thailand, plus former Soviet Union and African countries, lack sophisticated regulatory structures, Gushin believes they will over time. He supports stringent compliance programs to prevent illegal funds from bankrolling international property and financing terrorism.
Compliance mandates The concept of strong compliance mandates
dates back to the paper days. From 1978 through the early 2000s, Atlantic City enjoyed an East Coast gaming monopoly. Regulators worried about billions flowing through this one jurisdiction. Former FBI Special Agent Thomas W. Raftery
III (1988-2010) was there. His educational credentials in economics, accounting, and as a Certified Fraud Examiner (CFE), trained him to expose corruption and white collar crimes. He confronted corruption in the Afghanistan Reconstruction efforts and was also the first Inspector General of the Delaware River Port Authority and Port Authority Transit Corp. These organizations operate bridges and trains connecting Pennsylvania and New Jersey. Raftery headed the Newark (New Jersey) Public Corruption Task Force, interfacing with the FBI, IRS, U.S. Customs and New Jersey State Police (NJSP). Raftery’s expertise resulted in his 1995
transfer to Atlantic City, where he directed its public corruption program through 2010. He led the Atlantic City Casino Money Laundering Task Force, a group comprised of members of the FBI, IRS, U.S. Customs, Drug Enforcement Administration (DEA), NJSP, United States Attorney’s Office and NJ Attorney General’s Office. The job description included investigating
money laundering and related casino crimes, plus reviewing casinos’ filed suspicious activity and transaction reports. Raftery often searched for a tactic called “structuring“ or “smurfing.” He explains, “Smurfing divides large sums of
money into smaller amounts to avoid detection. It often uses more than one person to launder money through the casinos. The good news is that casinos are better prepared against it.“ After leaving law enforcement, Raftery launched The Falcon Consulting Group,
32 SEPTEMBER 2017
International, LLC in New Jersey in May 2014. The group of retired special agents from various federal agencies, state troopers, county and local police officers and financial experts provide numerous services. Their roster includes anti-money laundering and training assistance, background checks, investigations, compliance assessments, cyber security, fraud and forensic accounting. What crime-fighting tools help Raftery? The
Financial Crimes Enforcement Network (FinCEN) has developed national requirements for financial institutions- including casinos-with assets over $1 million. They must submit a written compliance plan, based on specific risks of their casino products and services.
Risk assessment Raftery urges every casino to conduct its own
money laundering risk assessment, considering its size, location, dollar volume, types of games, customer profiles and internal controls. He states, “All reports go directly to FinCEN, which may level serious fines for non-compliance. From April to October 2016, FinCEN fined three casinos nationwide a total $16 million.” The Bank Secrecy Act (“BSA”), a complex set of federal laws and regulations, requires financial institutions keep records, make reports and conduct due diligence to help the federal government detect financial crimes. Failure can prove costly. Mandated Currency Transaction Reports-Casino (CTR-C) document individuals “cashing out” more than $10,000 at once. Raftery says, “This $10,000 threshold has held for years, without an inflation adjustment.
CTR-C reports are derived from cash transactions involving both average people and criminals. Only a person’s imagination limits their money laundering methods. Some individuals time their “cash out“ for different days to prevent detection by casino personnel. FinCEN also requires anti-money laundering training of casino personnel and the pit boss is the first line of defense.“ In addition, casinos file a Suspicious
Activity Report-C (SAR-C) about customers displaying questionable behavior and FinCEN receives a copy. SAR-Cs are a valuable tool to help law enforcement deter and track illicit activity. The USA Patriot Act amended the BSA after the September 11, 2001 terrorist attacks. It aimed to strengthen U.S. measures to prevent, detect and prosecute international money laundering and terrorism financing. The Patriot Act facilitates financial institutions and casinos‘ information sharing while protecting them from liability. Raftery says that money laundering is one component of a broader picture. Corruption may also exist in the decisions on awarding licenses and setting tax rates that could affect gaming.
The gaming industry has improved its own compliance standards since 2006, according to the December 1, 2016 report from the independent inter-governmental Financial Action Task Force (FATF). The study, released every 10 years, praised the American Gaming Association‘s (AGA) greater anti-money laundering and anti-terrorism financing efforts. Recognizing its growing importance, the AGA surpassed prior recommendations via enhanced customer identification
Image: vchalup/Adobe Stock
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