USA Patriot Act - Final Regulations that apply to Casinos and Card Clubs
September 2002
By Alan B. Horn, Carl A. Fornaris,
and Ileana Gomez, Greenberg Traurig
View or download the PDF version of this Alert
here.
On September 18, 2002, the United States Department of the Treasury issued
a final regulation related to the suspicious transaction reporting regime
to which the nation’s banks, thrift institutions, credit unions, broker-dealers,
and certain money services businesses are already subject. The final regulation
will require casinos and card clubs whose gross annual gaming revenue is
more than $1 million to file a suspicious activity report by casinos ("SARC")
with the Treasury’s Financial Crimes Enforcement Network on all transactions
of at least $5,000 that the casino "knows, suspects, or has reason to suspect"
fall into specific categories.
The final regulation becomes effective 30 days after the date of its
publication in the Federal Register.
Background
Under the Bank Secrecy Act, as amended by the USA PATRIOT Act, the Secretary
of the Treasury was granted the authority to require financial institutions
to report suspicious transactions. The statutory definition of "financial
institution" includes a casino, gambling casino, or gaming establishment
with an annual gaming revenue of more than $1,000,000 which:
- is licensed as a casino, gambling casino, or gaming establishment
under the laws of any state or local government; or
- is an Indian gaming operation conducted under or pursuant to the Indian
Gaming Regulatory Act other than an operation which is limited to class
gaming.
Final Regulation
Reporting Requirements. The regulation requires that every casino
file a SARC for any transaction conducted or attempted by, at or through
a casino, that involves or aggregates at least $5,000 in funds or other
assets, and that the casino knows, suspects or has reason to suspect that
the transaction:
- involves funds derived from illegal activity or is intended to hide
or disguise funds or assets derived from illegal activity as part of a
plan to violate or evade federal law;
- is designed to evade any requirements of these SARC reporting requirements
or any other regulations promulgated under the Bank Secrecy Act;
- has no business or apparent lawful purpose or is not the sort in which
the particular customer would normally be expected to engage, and the
casino knows of no reasonable explanation for the transaction after examining
the available facts, including the background and possible purpose of
the transaction; or
- involves use of the casino to facilitate criminal activity.
Throughout the comment period, commenters expressed their concerns that
the objective reporting standard required by the regulation would be overly
burdensome on the fast-paced casino industry. The Treasury Department, however,
opted against making changes to the standard because they found the standard
to be a critical component to the imposition of a due diligence requirement
on reporting entities.
Confidentiality of Reports/Limitation of Liability. The regulation
prohibits any casino, director, officer, employee, or agent of any casino,
who files a SARC to notify any person involved in the transaction that the
transaction has been reported.
Additionally, the regulation grants those who file a SARC, whether voluntarily
or as required by the final regulation, broad protection from liability
for filing the report. The final regulation provides that a casino that
files a SARC is protected from liability for any disclosure made in the
SARC or for failure to disclose the fact that such report was filed.
The Treasury press release and final regulation are available on the
Treasury website at
http://www.treasury.gov/press/releases/po3436.htm
© 2002 Greenberg Traurig
Additional Information:
For more information, please review our Corporate & Securities Practice
description, or feel free to contact one of our attorneys.
This GT ALERT is issued for general purposes only and is not intended
to be construed or used as legal advice. Greenberg Traurig attorneys provide
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