California Casino Fined $900K by FinCEN for Anti-Money Laundering Failures

Posted on: October 28, 2024, 08:31h. 

Last updated on: October 28, 2024, 09:48h.

Devin O'Connor @CasinoorgDevinO Read More

Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

A California casino has been hit with a massive fine to settle allegations brought against the commercial card room by the Financial Crimes Enforcement Network (FinCEN).

The owners of the Lake Elsinore Hotel and Casino in Southern California between Los Angeles and San Diego have agreed to a civil monetary penalty of $900K to resolve the many violations of the Bank Secrecy Act that an enforcement investigation conducted by FinCEN alleged. In the consent order, Sahara Dunes Casino, LP, the parent company of Lake Elsinore, admits to years of failures to complete Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs).

Lake Elsinore operated for years without the most basic anti-money laundering controls, putting its customers and the U.S. financial system at risk and denying law enforcement information on suspicious activity,” said FinCEN Director Andrea Gacki.

FinCEN, a bureau within the US Treasury Department, collects and analyzes information related to the movement of money within banking and other industries that handle large amounts of cash. The agency is primarily focused on combatting domestic and international money laundering, terrorist financing, and other financial crimes.

FinCEN’s fining of the Lake Elsinore cardroom is the agency’s first enforcement action against a casino in six years.

“This action should serve as a reminder that all financial institutions — regardless of their type or size — must comply with their obligations under the BSA and FinCEN’s regulations,” Gacki added.

Sahara Dunes Casino, LP, is controlled by the Kingston family, who are members of a Utah polygamous sect. 

Lax Anti-Money Laundering Controls 

Lake Elsinore Hotel and Casino is one of 82 commercial cardrooms licensed by the California Gambling Control Commission (CGCC). The cardroom has 22 nonhouse-banked table games like poker and variants of other popular casino games where players take turns acting as the dealer, or a third-party proposition player (TPPP) is utilized.

The federal law passed in 1970 requires businesses like cardrooms to file CTRs when a customer transacts “cash in” or “cash out” totaling more than $10K in a 24-hour period. Cardrooms are also legally mandated to identify and report suspicious transactions involving money transfers of $5,000 or more through an SAR filing.

The reporting and transparency that financial institutions provide through these reports is essential financial intelligence that FinCEN, law enforcement, and others use to safeguard the U.S. financial system and combat serious threats, including money laundering, terrorist financing, organized crime, corruption, drug trafficking, and massive fraud schemes targeting the U.S. government, businesses, and individuals,” the FinCEN summary judgment read.

The FinCEN investigation found that the Lake Elsinore casino failed to have a designated Bank Secrecy Act compliance monitor. In reality, the casino’s Compliance Committee consisted of the general manager and chief operations officer, both of whom “had no professional or educational experience, or training, related to compliance with the BSA.”

Monitor Mandated

In resolving the anti-money laundering violations, Lake Elsinore Hotel and Casino must have an independent AML consultant approved by FinCEN to review the casino’s anti-money laundering program and make recommendations to improve its effectiveness.

If the cardroom adequately updates its AML program and becomes compliant with the Bank Secrecy Act, FinCEN will reduce the total fine by $50K. As such, the casino has been ordered to immediately pay the Treasury Department $850K.