Source: https://www.fincen.gov/resources/statutes-regulations/guidance/fincen-correspondence-american-gaming-association-regarding
Timestamp: 2019-04-26 10:26:17+00:00

Document:
Thank you for your December 23, 2014, letter to FinCEN Director Jennifer Shasky Calvery with your concerns about a news article referencing potential FinCEN guidance concerning sports betting. While the article apparently was based on unauthorized sources without a clear understanding of the facts, we have been planning on communicating to the casino industry directly with respect to a particular concern in this regard.
It has come to the attention of the Financial Crimes Enforcement Network (“FinCEN”) and its law enforcement and regulatory colleagues that increases in sports betting conducted on behalf of third parties are facilitating criminal activity and posing a money laundering risk to the U.S financial system. In connection with this, it has also come to our attention that casinos may be under the impression that unless specifically directed to do so, a casino never has to ask a patron whether he or she is betting on his or her own behalf or on behalf of another party. We are communicating directly with your organization to correct any such misperception and to remind your industry about the importance of applying a risk-based approach with respect to this issue as well as the need to implement reasonably designed AML programs to address among other risks, the risks associated with third-party betting.
FinCEN understands that certain organizations and individuals have been circumventing various laws related to sports betting.1 More specifically, criminals are making bets with legally operating sports books, including by using intermediaries to place bets on behalf of unidentified third parties (third-party betting). In these cases, the intermediaries rarely voluntarily disclose to the casino that a transaction is being conducted on behalf of a third party, thereby disguising the third party’s role in the transaction and obscuring the source of funds used to place the bet. This poses distinct money laundering risks for casinos.
In addition to concealing the owner and the origin of funds, third-party betting poses distinct money laundering risks for casinos because it allows criminal organizations, illegal sports books, and others located in any state, where gambling may be illegal, to place bets within states where sports betting is legal.
Law enforcement has been focusing on this activity for some time. For example, in October 2012, law enforcement closed down a significant bookmaking operation associated with a major organized crime group that had connections to Las Vegas sports books.2 Additionally, FinCEN has observed numerous instances in which casino sports books failed to identify in Currency Transaction reports (CTRs) third-parties on whose behalf transactions had been conducted.
Failure to identify and report suspicious activity.
Failure to file accurate CTRs.
Possible AML Compliance program deficiencies.
Casinos subject to the BSA are required to develop and implement a compliance program reasonably designed to manage the risk of illicit activity and ensure compliance with applicable regulations. The BSA requires casinos to file reports, properly identify customers conducting transactions, and maintain appropriate records of transactions. These reports and records are highly useful in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.3 Casinos’ compliance programs also must include risk-based procedures to prevent customers from circumventing BSA requirements.
FinCEN appreciates the efforts of your organization to help maintain industry focus on the importance of the BSA, and the effort that the American Gaming Association has put into the recent release of a best practices document. FinCEN invites the AGA to share this letter with its members in advance of FinCEN placing it on our website for future reference. Please don’t hesitate to reach out to us again with any of your concerns. Your association and members are welcome to contact FinCEN’s regulatory helpline at 800-949-2732 with any questions about this letter.
1There has been a ban on land-based sports betting in most states since the passage of the Professional and Amateur Sports Protection Act (“PASPA”) in 1992. Currently, Nevada and Delaware have legal land-based sports betting, though several other states are trying to implement legalized sports betting. Together, the PASPA, the Interstate Wire Act of 1961 (18 U.S.C. § 1084), the Travel Act of 1961 (18 U.S.C. § 1952), and the Illegal Gambling Business Act of 1970 (18 U.S.C. § 1955) prohibit sports betting between states that disallow sports betting. The Interstate Wire Act, often called the Federal Wire Act, prohibits the operation of certain types of betting businesses in the United States. The U.S. Fifth Circuit Court of Appeals has ruled that the Wire Act prohibition on the transmission of wagers applies only to sports betting. The Travel Act forbids the use of the U.S. mail, or interstate or foreign travel, for the purpose of engaging in certain specified criminal acts. The Illegal Gambling Business Act was enacted as part of the Organized Crime Control Act of 1970 and specifically aimed at syndicated gambling, that is, large-scale, illegal gambling operations that were thought to be financing organized crime.
2See FBI New York Field Office press release (February 17, 2012). Four Gambino Crime Family Members and Associates Plead Guilty in Manhattan Federal Court, http://www.fbi.gov/newyork/press-releases/2012/four-gambino-crime-family-members-and-associates-plead-guilty-in-manhattan-federal-court.
4See 31 CFR § 1021.311-313.
5See 31 CFR § 1021.313.
8A SAR is required if a casino knows, suspects, or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part) is intended or conducted as part of a plan to violate or evade any Federal law or regulation or to avoid any transaction reporting requirement under Federal law or regulation. 31 CFR § 1021.320.
9See 31 U.S.C. 5321(a)(4) and 5324 and 31 CFR § 1010.820(e) and 31 CFR § 1010.314; see also 18 U.S.C. 1956 and 1957.

References: § 1084
 § 1952
 § 1955
 § 1021
 § 1021
 § 1021
 § 1010
 § 1010