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Frequently Asked Questions Casino Recordkeeping, Reporting, and Compliance Program Requirements

Last year, I started my Vegas casino $1 chip collection (I have 50-some at the moment). For most, I went to the casino cage with a $1 bill and asked for a $1 chip. Most were nice enough to look through their chips to find newer, clean ones for me. There are several key methods that criminals deploy when money laundering. Many groups rely on breaking up the deposits into small tranches to avoid flagging in a practice known as structuring. Others simply buy chips with cash, spend some time on the casino floor and attempt to cash them out as winnings. Smurfs - A popular method used to launder cash in the placement stage. This technique involves the use of many individuals (the'smurfs') who exchange illicit funds (in smaller, less conspicuous amounts) for highly liquid items such as traveller cheques, bank drafts, or deposited directly into savings accounts.

Purpose

This document provides guidance interpreting the requirements of the Bank Secrecy Act ('BSA') regulations¹ as they apply to the casino and card club industries in the United States.

Section A: 31 C.F.R. § 103.11 Casino and Card Club Definitions²

Question 1: What gaming institutions are subject to the BSA casino regulatory requirements?

Answer 1: A casino or a card club that is duly licensed or authorized to do business as such, and has gross annual gaming revenue in excess of $1 million, is a 'financial institution' under the BSA. The definition applies to both land-based and riverboat operations licensed or authorized under the laws of a state, territory,³ or tribal jurisdiction, or under the Indian Gaming Regulatory Act.⁴ Tribal gaming establishments that offer slot machines, video lottery terminals, or table games,⁵ and that have gross annual gaming revenue in excess of $1 million are covered by the definitions. Card clubs generally are subject to the same rules as casinos, unless a different treatment for card clubs is explicitly stated in 31 C.F.R. Part 103.

Question 2: Is a tribal gaming establishment that offers only bingo and related games considered a casino for purposes of the BSA?

Answer 2: No. FinCEN has the authority under the BSA to define as 'casinos' tribal gaming establishments that offer only bingo and related games. Nevertheless, in addressing the treatment of tribal gaming under the BSA, we have indicated that 'activities such as bingo . . . are not generally offered in casino-like settings and may create different problems for law enforcement, tax compliance, and anti-money laundering programs than do full-scale casino operations.'⁶ FinCEN does not view tribal gaming establishments that offer only traditional bingo (i.e., not contained in electronic gaming devices) and related games in non-casino settings as satisfying the definition of 'casino' for purposes of the BSA.

However, a tribal gaming establishment that offers both bingo and slot machines or table games, for example, would satisfy the definition of 'casino,' if gross annual gaming revenue exceeds $1 million. All gaming activity must go into the calculation of gross annual gaming revenue, including activity that standing alone would not transform an establishment into a casino. This is the same treatment that FinCEN applies to a state-licensed casino that offers poker (which is a non-house banked game) since poker and a poker room are an integral part of a casino operation.⁷

Question 3: Is a 'racino' considered a gaming institution subject to the BSA?

Answer 3: The term 'racino' has not been separately defined nor included specifically in the definition of casino for purposes of the BSA. In general, the term refers to horse racetracks that may be authorized under state law to engage in or offer a variety of collateral gaming operations, including slot machines, video lottery terminals, video poker or card clubs. FinCEN relies on the state, territory or tribal characterization of 'racino' gaming in determining whether an entity or operation should be treated as a casino for purposes of the BSA. If state law defines or characterizes slot machine or video lottery operation at a racetrack as a 'casino, gambling casino, or gaming establishment,' and the gross annual gaming revenues of that operation exceed the $1 million threshold, then the operation would be deemed to be a 'casino' for purposes of the BSA and subject to all applicable requirements.⁸

Question 4: Would a race book or sports pool operator that has a 'nonrestricted' Nevada gaming license be considered a casino for purposes of the BSA?

Answer 4: Yes. Operators or owners of a Nevada race book or sports pool,⁹ that are duly issued a 'nonrestricted' Nevada gaming license,¹⁰ and that have gross annual gaming revenues in excess of $1 million are subject to the casino requirements under 31 C.F.R. Part 103, as well as all other applicable BSA requirements. This would include a Nevada race book or sports pool licensee that obtained a 'nonrestricted' gaming license to operate a race book or sports pool on the property of another casino, or that operates a number of satellite race books and sports pools that are affiliated with a central site book.

Question 5: Is an establishment that offers only off-track betting on horse races considered a casino for purposes of the BSA?

Answer 5: In addressing the treatment of tribal gaming under the BSA, we have indicated that 'pari-mutuel wagering' should receive the same treatment as bingo when determining whether an establishment satisfies the definition of 'casino.' ¹¹ Furthermore, Class III gaming under the Indian Gaming Regulatory Act includes off-track betting on horse races.¹² In addition, in Nevada, an establishment that offers only off-track betting on horse races would need to obtain a non-restricted gaming license. In many instances, off-track betting on horse races will involve pari-mutuel wagering. However, pari-mutuel wagering also applies to sporting events. For purposes of the BSA, FinCEN views casinos to include establishments in Nevada and in tribal jurisdictions that offer only off-track betting, provided the establishments permit account wagering and provided gross annual gaming revenue exceeds $1 million.¹³ In many instances, off-track betting will involve accounts through which customers may conduct a variety of transactions, including wagers, deposits, withdrawals, and transfers of funds. As we recognized when addressing the treatment of tribal gaming under our rules, FinCEN has sought to apply the BSA to 'gaming establishments that provide both gaming and an array of financial services for their patrons.'¹⁴

Question 6: Are 'greyhound racing clubs' that offer table games considered gaming institutions for purposes of the BSA?

Answer 6: If a 'greyhound racing club'¹⁵ generates gross annual gaming revenue in excess of $1 million from poker tables (which would be akin to offering card games in a card club or card room type operation), and if the gaming facility is duly licensed or authorized by a state or local government to do business as a card club, gaming club, card room, gaming room, or similar gaming establishment, it would be subject to the BSA.¹⁶ Therefore, once the $1 million in revenue threshold is exceeded for such poker tables, all gaming activity must go into the calculation of gross annual gaming revenue, including activity that standing alone would not deem an establishment a casino, such as greyhound racing at the track, simulcast for other greyhound racing tracks, simulcast for horse racing tracks, or simulcast for jai alai.

Question 7: Are horse racetracks that offer pari-mutuel or other forms of wagering only on races held at the track considered casinos for purposes of the BSA?

Answer 7: FinCEN does not view a horse racetrack that offer

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