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Good day ladies and gentlemen, and welcome to today's webcast entitled IRS TEGE Bank Secrecy Act Essentials for Casinos.

To submit a question or a comment at any time during the webcast, please click on the Ask A Question button at the bottom of your screen.

Simply type your message in the box and click the Submit button.

At this time it is my pleasure to turn the floor over to your host, Mark Betzler.

Sir, the floor is yours.

Thank you.

Hello and welcome everyone.

This webinar is hosted by the Office of Indian Tribal Governments.

My name is Mark Betzler, and I'm an Indian Tribal Governments Specialist with the Internal Revenue Service Office of Indian Tribal Governments.

Today this webinar will cover the essential items casinos need to know about the Bank Secrecy Act.

And I'm Stan Wiatros, also an Indian Tribal Government Specialist.

In 2000 the IRS launched the Office of Indian Tribal Governments.

Our mission is to provide tribal entities top-quality customer service by helping them understand and comply with their tax responsibilities.

We help tribal governments deal with their federal tax matters and provide a single point of contact for help and service.

Indian Tribal Government specialists address issues and offer guidance to Indian tribes in the following areas: tribal governments as employers, distributions to tribal members, and the establishment of governmental programs and businesses.

Before we begin, we have a few announcements.

The information contained in this presentation is current as of the date it was presented and should not be considered official guidance.

This program is being recorded and will be maintained in accordance with federal recordkeeping laws.

It will be archived for later viewing on our website at

We are not offering a certificate of completion for attending this webcast, and it will therefore not be eligible to request a continuing professional education credit.

Finally, although your questions may not be answered during this event, we want to hear from you.

If you hear something during the presentation that prompts a question, simply click on the Ask A Question link on your screen.

Your questions will help us determine future topics as well as make sure we have updated information on

In this webinar we will cover the basic essentials you should know about Title 31.

We will begin with some basic definitions.

Review the Forms CTR and SAR, go over some comprehensive exercises and important things to know; and then finally look at some real life examples of Title 31.

Let's discuss some definitions.

FinCEN requires that each casino adhere to a set of regulations and requirements.

To ensure compliance with these regulations and requirements, each casino must design and implement a compliance program.

This compliance program needs to be written, and designed in such a way, that the program assures compliance and provides monitoring of that compliance.

The compliance program must provide for six items: First is a system of internal controls which will assure ongoing compliance with the regulations and requirements.

Second, a designated person who is responsible for assuring day-to-day compliance.

Third, training of the casino's employees on the program's internal controls must be done.

Fourth, internal controls must be created, implemented and followed to ensure all information from all sources is used.

Fifth, all automated data must be used as a source of information.

And finally, sixth, internal and/or external, independent testing, of the casino's actual compliance must be performed.

Using all available information available, automated or not, the compliance program must also include: procedures to gather and verify a patron's name, address, Social Security number, and all other required information; procedures to recognize the occurrence of any transaction or pattern of transactions which appear structured in nature; and procedures to recognize what documents need to be created and maintained.

Finally, the compliance program must contain provisions for internal and/or external testing of the casino's actual compliance with all the required regulations and requirements.

The frequency of the testing will be based on the casino's risk analysis.

As pointed out earlier, FinCEN requires casinos to design and implement their own risk-based compliance program to comply with the Bank Secrecy Act.

To comply with Bank Secrecy Act requirements, for example recognition of structuring and CTR filing, casinos will often use commercially-available electronic tracking logs due to their ease of use by multiple departments.

These logs are usually the original point of entry for many transactions regarding patron activity.

They are used to record cash-in and cash-out at the pits and at the cage, and are a tool to identify multiple transactions by the same patron.

Since casinos have tracking requirements beyond those of the Bank Secrecy Act, like for the W-2G, they will often use the same tracking log for all their tracking requirements.

And some begin tracking players at amounts as low as $500.00.

What internal controls you use to determine, when, and how, to track your patrons should be based on your risk analysis.

Good internal controls are essential so the pits and cages can effectively communicate about beginning and continuing the tracking of players.

This slide shows a list of cash-in transactions normal to casinos.

In general, when a patron conducts a transaction where he gives cash to a casino, this equals a cash-in transaction.

There are exceptions to this general rule, and you should contact your ITG specialist if you believe you have an exception.

Please notice that cash-in transactions are not restricted to gaming transactions.

This slide provides examples of cash-out transactions normal to casinos.

A cash-out transaction is a payout, reimbursement, or distribution of coin or currency.

This list should look familiar to you as it is the mirror image of the prior slide's cash-in list.

The cash-in and cash-out examples are not all inclusive as you will find additional examples on the CTR form.

Multiple transactions are treated as single transactions if the casino has knowledge that they are by or on behalf of any person, and the result in either cash, in or out, totaling more than $10,000.00 in any gaming day.

Gaming day means the normal business day of the casino.

For a casino that offers 24-hour gaming, the term means that 24-hour period by which the casino keeps its books and records for the business, accounting, and tax purposes.

For purposes of the regulations contained in this part, each casino may have only one gaming day common to all of its divisions.


Cash-in transactions are aggregated with cash-in transactions.

And cash-out with cash-out.

But never together.

Whether the patron conducts the transaction himself or enlists the help of an agent, family member, or friend, the casino must identify the responsible owner of the cash and aggregate the transactions to him.

Knowledge is when anyone, regardless of what department they work in, has knowledge that the patron exceeded the $10,000.00 threshold.

All employees, not just cage and pit, should be trained in Title 31.

The reason for this is to enhance their awareness of reporting requirements and suspicious activity.

Employees can then alert management of these activities so that they can complete the required reports.

The Monetary Instrument Log, or MIL, tracks patron transactions using monetary instruments.

Monetary instruments include, but are not limited to: personal checks, business checks, bank checks, cashier's checks, third-party checks, travelers' checks, and money orders.

The cashing of any of these instruments will require an entry on the MIL.

Transactions should be placed on the MIL in the chronological order in which they occur.

It should also contain the following information: the date, time and amount of the transaction; the name and permanent address of the patron; a description of the type of instrument used; the name of the business or person who issued the instrument; all pertinent reference numbers; and finally, the name or casino license number of the casino employee who conducted the transaction.

We'll first look at CTRs and then go over some CTR-specific exercises.

You are required to file a complete CTR within 15 days following the transaction.

Remember, do not aggregate cash-in with cash-out transactions in order to arrive at the $10,000.00 filing threshold.

But, filing a CTR which includes both cash-in and cash-out may be necessary, as in the following example: The patron may cash out $15,000.00 at the cage and buy-in at the pits for $20,000.00.

As a result, both amounts would be reported on the CTR.

CTRs are used by: the IRS to investigate tax fraud and evasion, and by other federal law enforcement agencies in criminal investigations for things like money laundering, identifying suspicious transactions, evaluating merits of criminal cases, tracing proceeds from illegal activities, and terrorism.

When gathering the required information from the patron, make sure that a physical address is recorded.

If a physical address is not available, you should include an explanation and then gather the patron's mailing address.

In verifying the patron's information, you should examine documents normally acceptable in the banking community, such as: a driver's license, a passport, or an alien identification card.

You should provide a complete description when you are recording the identification.

Just writing down"passport" is not sufficient.

A complete description would include: the passport country, expiration date, and passport number.

Do not complete the transaction if identification is not provided.

We'll now go over some CTR-specific exercises.

Exercise one.

You have a patron that buys-in with $5,000.00 cash.

Then later that same day he goes to the cage and buys another $5,000.00 in chips with cash.

What form or forms are required?

The answer is none.

The pit should start tracking the patron and notify the cage that tracking has begun while providing the cage all known information on the patron.

When the patron goes to the cage, the cage should record the transactions.

No CTR is necessary since the currency does not exceed $10,000.00.

Exercise two.

You have a patron at a table and he buys in with $5,000.00 in cash.

Your dealer is highly skilled and the patron swiftly loses the entire buy-in.

He gets up and buys in for $6,000.00 at a different table, with a different dealer.

Both buy-ins happen in the same gaming day.

In this situation, are any forms required to be filled out?

The answer is yes.

The casino needs to fill out a CTR.

The cash-in transactions need to be aggregated regardless of the losses incurred.

With the first buy-in, the pit will begin tracking the patron and inform the cage.

Upon the second buy-in, the cash-in transactions are aggregated and therefore the CTR needs to be filled out and the required information gathered.

The differing dealers, tables, and totality of losses do not affect the necessity of filling out the CTR.

Exercise three.

Your patron, Mr. Moneybags, buys in for $5,000.00 cash at 5:00 p.m. And buys in again at 11:00 p.m.

for $6,000.00 with a cashier's check.

Finally, at 4:00 a.m., he buys in for an additional $7,000.00 with cash.

Your gaming day ends at 2:00 a.m. What amount should appear on the CTR?

The answer is nothing.

The cashier's check needs to be logged into the MIL, but no CTR is necessary since the cash does not exceed $10,000.00 in the same gaming day.

Thank you, Mark.

We'll now take a look at suspicious activity reports, also known as SARs.

SARs are the other key report required under Title 31.

The information gathered from SARs is shared with various local, state, national, and international law enforcement agencies: in addition to conducting money laundering investigations, these agencies investigate other criminal activity including drug sales and human trafficking, identify and interrupt terrorist funding operations, and uncover and analyze trends involving financial crimes.

During this portion of today's webinar, we will: identify the general requirements for filing a SAR, discuss examples of what constitutes a suspicious transaction, and demonstrate how the SAR and CTR reporting requirements work in combination with one another.

Before we begin, I'd like to share with you some data compiled over the past three years by the Financial Crimes Enforcement Network, or FinCEN.

The data show the increased number of SARs filed electronically by all casinos and card clubs as reported by FinCEN.

FinCEN hasn't yet provided the 2015 data for SAR filings by tribal casinos.

We'll now look at the general requirements that govern the filing of SARs.

I'll begin with the dollar threshold.

A transaction must involve or aggregate at least $5,000.00 for a SAR to be required.

A SAR is not required for a transaction below $5,000.00.

However, a casino may voluntarily file a report for transactions below this threshold.

In addition, the $5,000.00 includes not only cash but also the value of checks and any other assets.

It may be from a single transaction or a series of related transactions.

These related transactions may take place over more than one day and may involve multiple persons.

Also, bear in mind that the transaction doesn't need to be completed for a SAR to be required.

An attempt to complete a transaction is sufficient to require a SAR.

Of course, to be reportable, the transaction must be suspicious.

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.

A casino is not making a criminal accusation when it files a SAR.

The SAR merely reports who was involved, what was witnessed, and why the activity appeared unusual and suspicious.

A SAR is not required if the transaction involved a robbery or burglary at the casino and the casino properly reported the crime to the appropriate law enforcement agency.

In addition to the general filing requirements we just discussed, there are some other rules that apply to SAR filings.

First, there is a requirement that the existence of a SAR, and any information related to the SAR, remain confidential.

This requirement extends to the casino, its officers, managers, employees, and agents.

You are permitted to disclose information to certain government agencies with oversight over Title 31 compliance and other appropriate law enforcement personnel investigating related cases.

The Patriot Act added another exception that allows casinos and other financial institutions to share information with one another.

The information does not include the SAR itself, and a casino wishing to participate in this information sharing program must first notify FinCEN.

The sharing is then only allowed with other financial institutions who have also notified FINCEN.

The FinCEN website has more information concerning this program.

Finally, the law protects a casino and its employees against legal action brought as a result of preparing or submitting a SAR.

Once a suspicious activity is identified, the casino has 30 days to prepare and submit a SAR.

In the event that the customer's identity is not known, an additional 30 days is allowed, but in no case will the filing deadline be extended beyond this 60-day limit.

A casino should immediately call a local law enforcement agency if the situation involves a violation that requires immediate attention, such as an ongoing money laundering scheme.

The casino must still file a SAR, however.

If you suspect possible terrorist financing, you may contact FinCEN directly.

Again, completion of a SAR is still required.

Now, we'll take a look at some examples to reinforce and clarify what we've discussed.

We'll begin by looking at transactions that demonstrate what is meant by "suspicious." Criminals involved in a variety of illegal activities, including drug dealing, robbery, and other crimes, have large amounts of cash, often in smaller denomination bills.

Due to the difficulty of transporting and spending these smaller bills, they often attempt to exchange them for larger denomination bills, or better yet, a casino check.

This may involve directly attempting to exchange the money at the cage, buying chips and then cashing out without making any significant wagers, or feeding large amounts into the bill validater and again cashing out with only minimal wagering.

A pair of gamblers may attempt to launder money using roulette, craps, or baccarat.

They will cover both sides of a bet and cash out without having taken any significant risk.

Sudden or unexpected wagering increases by a regular customer qualify as suspicious.

Similarly, a customer who wagers large amounts and is known to be from an area identified as high risk for financial crimes or drug trafficking is suspicious.

Transactions involving either bribery or coercion also are suspicious.

Money launderers often use these tactics to assist them in their efforts.

Attempts to evade the Title 31 requirements are also grounds for classifying a transaction as suspicious.

Keep in mind that Title 31 requires you to secure identification from a guest before completing any reportable transaction.

Refusal to provide identification, or providing false or fraudulent ID, falls into this category.

Structuring a transaction in a way that avoids exceeding the $10,000.00 threshold is also an attempt to evade these requirements.

A person taking a portion of a reportable payout in the form of a check, and a guest dividing large buy ins between themselves and another individual to circumvent the reporting requirements, are two examples of structuring that are reportable as suspicious.

Using a company check to pay the personal gambling debt of an officer or employee illustrate a transaction that serves no business purpose and may indicate possible embezzlement from the company.

Finally, an example of using a casino to facilitate criminal activity is a customer using the casino to commit check or credit card fraud.

Now I'd like you to consider for a moment if the following examples are suspicious and whether a SAR should be filed.

In the first example, a customer uses an ID with a sticker extending the expiration date.

Though the use of the sticker is common in the state, the sticker appears to be a fake.

In addition, there is conflicting information concerning the customer's address.

Is this suspicious?

Because of the suspected fraudulent ID and the fact there is conflicting information concerning the guest's address, the transaction is considered suspicious and the casino should prepare a SAR.

In this scenario, a customer has $25,000.00 wired to the casino from different senders and multiple locations.

Are these transactions suspicious in nature?

Receiving a large sum of money from multiple senders located in different cities should raise concerns about the source of the funds.

Therefore, the transaction is suspicious and a SAR is required.

The third scenario involves a "regular" customer with limited sources of income.

Inexplicably the customer begins placing significantly larger wagers.

Is this change suspicious?

Under these circumstances, the sudden increase in wagering, coupled with the customer's known sources of income, causes the need to file a SAR.

Casinos are obligated to consider all of the information at their disposal when deciding whether a transaction is suspicious.

The change in the customer's wagering pattern and the casino's knowledge of his limited sources of income must be taken together to make the determination.

Now we'll consider some scenarios that combine what we've learned about SARs and CTRs.

In this scenario, a customer leaves the pit area with $12,000.00 worth of chips.

On his way to the cage, the customer is observed splitting the chips with another customer.

Each customer redeems chips for less than $10,000.00, then the second customer returns the proceeds to the original winner.

What is the casino required to complete?

The casino must aggregate the transactions and file a CTR for the $12,000.00 total.

The first customer is the principal and the second customer is the agent.

Structuring the transaction in an attempt to circumvent the Title 31 requirements also requires the filing of a SAR.

A sound compliance program should include procedures to monitor large amounts leaving the pit and to identify chip redemptions by a customer with no record of chip purchases.

In this next scenario, a customer wins a $13,500.00 tournament jackpot.

He asks for $9,500.00 in cash and a check for the remaining $4,000.00.

What is the casino required to do in this situation?

The casino must collect the necessary information on the customer and prepare an MIL for the $4,000.00 check issued.

No CTR is required because the cash out amount is not over $10,000.00.

However, a SAR should be filed to report suspected structuring.

The customer in this transaction came to the cage to cash in $12,000.00 worth of chips.

When asked for the necessary information to prepare the CTR, the customer asked the pit boss to intervene.

The pit boss instructed the cashier not to fill out the CTR for this VIP patron.

What should the cashier do?

The cashier must complete the CTR as required by law.

The cashier should follow casino policy involving other procedures, such as notifying the casino manager or other officials.

A SAR is also required to report the customer's and pit boss's attempt to prevent the completion of the CTR.

We will now look at some important things to know about Title 31.

A casino, its managers, or its employees who willfully violate the requirements under Title 31 may be subject to penalty.

FinCEN may assess both civil and criminal penalties for violations of the recordkeeping, reporting, and other Title 31 requirements.

Generally civil penalties may range from $500.00 to $25,000.00 per violation.

Criminal penalties may include monetary penalties, prison sentences, or both.

Please note that when filing reports, a casino must use the legal name of the casino.

If the casino is incorporated, this can be found in the casino's articles of incorporation or its corporate charter.

If you have any questions about the casino's legal name, please contact your area ITG specialist, and he or she can help you with that issue.

The compliance program is a written document designed to assure compliance with Title 31 requirements.

When a Title 31 examiner is reviewing the casino's compliance program, some of the items he looks for are: the compliance program not being written, little or no ongoing training, no internal audits, not following internal guidelines, not using available computerized records, insufficient records and staffing, and not providing procedures for staffing change.

For a minimum of five years, the casino is required to maintain copies of all of the following: All records prepared or used by a casino to monitor patrons' gaming activity, separate record listing transactions between the casino and patrons which involve a face value of $3,000.00 or more of monetary instruments, all casino records, documents, or manuals required to be maintained by state and local laws, Indian tribe or tribal government, and tribal state compact, all records prepared or used to monitor a patron's gaming activity, such as patron tracking system, each statement, ledger card or other record showing every transaction posted to a patron's account, a record of each extension of credit of more than $2,500.00 (also including the terms and conditions), a record of each receipt of funds deposited or credited to the account of any person (including name, address, Social Security number, date, and the amount), and finally, a record of each bookkeeping entry to a patron's account.

Now we'll take a look of some examples of what's in the news.

While none of these casinos identified here are tribally owned, FinCEN has asserted penalties against tribal casinos as well.

Due to weaknesses in the Venetian Palazzo's Title 31 compliance program, the casino failed to file a SAR for a customer who used wire transfers and other instruments to deposit approximately $58 million into his account at the casino.

Under an agreement with the Department of Justice, the casino's operator agreed to forfeit $47 million it still held for the customer and to strengthen its Title 31 program.

John Ascuaga's Nugget Casino in Sparks, Nevada agreed to a $1 million civil penalty.

Despite having customers the casino knew were convicted embezzlers, it disregarded efforts to file SARs recommended by its own compliance officer.

The casino also had numerous recordkeeping violations and failed to file several CTRs.

Caesar's Palace Casino agreed to an $8 million civil penalty for lax anti-money laundering controls for its high rollers.

The casino allowed some of its wealthiest clientele to gamble anonymously.

This allowed some of the largest transactions to go unreported, which exposed the casino and the U.S. financial system, to risk.

FiInCEN assessed a $75 million civil penalty against Tinian Dynasty Hotel and Casino owned by Hong Kong Entertainment Investments Limited.

The penalty was for willful and egregious violations of the Bank Secrecy Act.

Tinian Dynasty failed to develop and implement an anti-money laundering policy.

No member of Tinian Dynasty staff was delegated responsibility for day-to-day compliance with the Bank Secrecy Act.

The casino failed to develop and implement policies and procedures designed to ensure compliance or to detect suspicious transactions.

It also never conducted an independent test of its systems to ensure compliance.

Further, casino personnel were not trained in BSA recordkeeping requirements or in identifying, monitoring, and reporting suspicious activity.

This is the end of today's presentation.

If you have questions about anything discussed here today, please visit

This webinar will be archived on, so if there's anything you missed today, you can always watch it there again.

From all of us in the Office of Indian Tribal Governments, thanks again for watching.

You can always contact us if you have any questions.

Email us at

If you represent a tribe, you can contact your ITG specialist.

For your convenience, the contact information for FinCEN has been listed.

Publication 3908 - Gaming Tax Law for Indian Tribal Governments FAQs for Indian Tribal Governments regarding Title 31 (Anti-Money Laundering) Financial Crimes Enforcement Network (FinCEN)