The casino and gaming industry is one of the most heavily regulated industries in the United States. Casino managers are required to comply with these federal regulations, including the Bank Secrecy Act, and specifically Title 31 (31 CFR; 31 USC). Among other things, Title 31 requires casinos to have an anti-money laundering (AML) training program for casino employees, but employee training is also crucial to avoid your casino racking up costly fines or being used for criminal activities.
In this article, we’ll talk about casino AML training, Title 31 and federal AML regulations, what Title 31 requires for your casino’s training program, and the penalties for failing to comply with Title 31 requirements.
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Do Casinos Require Anti-Money Laundering (AML) Training?
The casino and gaming industry is among the most heavily regulated business sectors in the country. In addition to state gaming requirements, casinos and card clubs are subject to federal anti-money laundering (AML) regulations. Although the vast majority of visitors to casinos come for leisure and entertainment, there are some bad actors who may attempt to use a casino's services to launder money.
Federal regulations including Title 31 require all casinos to have a risk-based AML training program for relevant employees. The extent and intensity of AML compliance training may vary depending on the responsibilities of the employee, but AML training should address CTR and SAR reporting and the casino's AML program. Employees should be taught an understanding of the products and how they can be used to launder money so that the employees will be equipped to spot any red flags.
What Is Title 31?
Title 31 was created by the Bank Secrecy Act (BSA), which was enacted in 1970 to help prevent financial crimes and prevent criminals and terrorists from using U.S. banks to fund illegal activities. One of the ways the BSA prevents financial crimes is through Title 31, which requires banks and other financial institutions to comply with recordkeeping and reporting requirements.
Title 31 of the Bank Secrecy Act requires all casinos who have a gross annual gaming revenue of at least $1 million to draft and implement a written training program that ensures compliance with the law’s anti-money laundering regulations. If the casino receives gaming revenue less than $1 million, the casino is not subject to Title 31 and instead is subject to Title 26 (IRC Section 6050I).
The Department of the Treasury has primary responsibility for implementing and enforcing Title 31 and the Bank Secrecy Act (BSA), but in practice this authority has been delegated to the Financial Crimes Enforcement Network (FinCEN). The Treasury Department has also delegated responsibility for assuring financial institutions' (including casinos') civil compliance with the law to various federal agencies, including the IRS.
What Is Required in a Casino's Title 31 AML Compliance Program?
Title 31 requires several items which must be included in a casino’s anti-money laundering (AML) program. At a minimum, Title 31 requires every casino's AML program to provide for all of the following:
- Internal controls (policies and procedures designed to assure compliance with Title 31 and the Bank Secrecy Act)
- Continuous training of casino employees, including in identifying unusual and/or suspicious transactions
- Independent testing for compliance, the scope and frequency of which correlated with the specific casino's money laundering and terrorist financing risks
- A compliance officer responsible for day-to-day compliance with Title 31 and the casino’s AML program
- Procedures for using all available information to determine, when required, the name, address and Social Security Number (SSN) of a person, as well as to verify their identity
- Procedures for using computers to aid in assuring compliance, if the casino has computerized systems
- Procedures for using all available information to determine any transactions or patterns of transactions required to be reported as suspicious
The IRS further clarifies the
definition of suspicious transactions:
To be suspicious, the casino must either know, suspect, or have reason to suspect that: the money or assets were derived from an illegal activity, the purpose of the transaction is to hide or disguise the funds or assets from another party, such as the government, creditors, business associates, spouses, or former spouses, that the casino is unaware of any legitimate business or lawful purpose for the customer to conduct the transaction in the manner it was done, that the casino is being used to facilitate an illegal activity, or finally, that the transaction is designed in a way to evade the Title 31 reporting requirements.
These compliance program requirements were implemented in order to protect casinos from criminal activities like money laundering and illegal financial transactions.
For help fulfilling these training requirements, WebCE offers convenient, online casino employee training courses, including Title 31 compliance training, and our team can help create a customized compliance program for your casino.
What Are the Penalties for Failing to Comply With Title 31?
Failure to comply with Title 31 requirements can result in significant penalties, including costly civil penalties as well as criminal penalties.
Title 31 Civil Penalties
The following are civil penalties which may be incurred if your casino fails to comply with Title 31 requirements:
- For each negligent violation of any of the reporting or recordkeeping procedures required by Title 31, a civil penalty, not to exceed $500 may be assessed.
- For each willful violation of the reporting requirements, a civil penalty, not to exceed the greater of the amount involved (not to exceed $100,000) in the transaction or $25,000, may be assessed against your casino, as well as any partner, director, officer, or employee who willfully participated in the violation.
- For failure to file FinCEN Form 105, a civil penalty, up to the amount of the currency or monetary instruments transported into or out of the United States, may be assessed. This penalty is reduced by any amount that was seized (by Customs) and forfeited for failure to file FinCEN Form 105. The penalty also applies to a report that was filed containing material omissions or misstatements.
- For each willful violation of the recordkeeping requirements, a civil penalty, up to $1000, may be assessed.
- A civil penalty up to the amount involved, less any amount forfeited to the United States, may be assessed against any person who willfully structures transactions after January 26, 1987, for the purpose of evading the reporting requirements.
Title 31 Criminal Penalties
The following are criminal penalties which may result from your casino failing to comply with Title 31 requirements:
- Any person who willfully violates the recordkeeping requirements of the BSA may be fined up to $1000 and/or imprisoned up to one year for each violation. The fine is increased to $10,000 and/or five years imprisonment if the violation is committed while violating another federal law that is punishable by imprisonment for more than one year.
- Any person willfully violating the currency and foreign transactions reporting requirements of the BSA may be fined up to $250,000 and/or imprisoned up to five years. If the violation is committed while violating another federal law or as a pattern of illegal activity involving transactions exceeding $100,000 in any 12-month period, the fine is increased up to $500,000 and/or ten years imprisonment.
- Any person who knowingly makes a false, fictitious or fraudulent statement or representation in any report may be fined up to $10,000 and/or imprisoned up to five years.
Building a Title 31 Compliance Program for Casinos
Casino compliance training is a crucial risk-reduction method for lowering the odds of your casino or card club falling victim to crime and racking up costly fines. Investing in Title 31, AML, and other compliance training delivers operational, financial, and strategic upsides for your casino or card club.
WebCE offers customized corporate training programs and casino compliance training courses together with other professional education courses that can be applied to several different licenses and certifications. Casino compliance training courses from WebCE include:
- Introduction to Title 31
- Suspicious Activity Reporting Under Title 31
- Cybersecurity and Casinos
- Title 26 Overview of the Internal Revenue Code
- Casinos and the Office of Foreign Asset Control (OFAC)
- and more!
To learn more about casino and card club employee training courses and our casino compliance solutions, visit our course catalog or reach out to our corporate sales team at 877-488-9322.
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