FinCEN announced on March 6, 2015 that Trump Taj Mahal Casino in Atlantic City, which filed for bankruptcy, had been assessed a $10 million penalty for repeated BSA violations. In its announcement, FinCEN noted that it had assessed a $477,000 penalty against the casino in 1998.
The casino’s 1998 settlement involved failure to timely file Currency Transaction Reports. FinCEN stated in its announcement of the penalty that the dollar amount “was influenced by [the casino’s] otherwise laudable BSA compliance programs and its cooperation with Treasury Department Officials during the casino’s IRS examination and final settlement of the matter with FinCEN.”
FinCEN’s 2015 announcement unsurprisingly does not include a reference to the casino’s “laudable” BSA program. Instead, FinCEN criticizes the casino for a “long history of prior, repeated BSA violations cited by examiners dating back to 2003,” resulting in the conclusion that the casino failed to establish and implement an effective BSA program. It should be noted that FinCEN determined that the casino’s failures were “willful”–as explained in footnote 3 in the Assessment of Civil Money Penalty, “willful” includes reckless action or willful blindness (which does not require acting “with an improper motive or bad purpose”).
One main driver of the IRS examiners’ criticisms of the casino appears to be the casino’s failure to monitor cash-in play at slot machines for CTRs and suspicious activity. This issue was apparently identified in the 2010 and 2012 examinations and the casino became aware of the issue as early as 2007. Because this play was not monitored, IRS examiners identified in a one-month period 30 CTRs that were not filed and should have been, and 10 CTRs that were filed but should not have been.
IRS examiners identified approximately 100 transactions that were not reported as suspicious during the 2010 and 2012 examinations. These included minimal gaming, structuring, and laundering funds through slot ticket-in, ticket-out machines. FinCEN also asserts that cage markers and front money transactions were not monitored for suspicious activity.
During the IRS’ 2010 examination, it identified 134 CTRs that had discrepancies or were missing information. Eighty-nine involved nineteen patrons who had discrepancies between the patron’s name and Social Security Number. FinCEN alleges that the casino failed to verify information provided by patrons. This suggests that casinos should use a third-party source or otherwise attempt to verify Social Security Numbers provided by their patrons.
The 2012 examination revealed issues regarding cash play at slot machines and failing to record Social Security Numbers during post-transaction aggregation of cash buy-ins at gaming tables.
Lastly, the casino apparently failed to include all required monetary instruments on the Negotiable Instrument Log.
The casino agreed to a “Third-Party Reviewer” to test the casino’s BSA program in 2015, 2017, and 2019.
FinCEN repeatedly refers to the casino having been made aware of issues during the course of IRS examinations, and the casino’s apparent failure to respond to the IRS examination findings. This highlights the importance of post-examination remediation by casinos, both to address any deficiencies identified by the IRS and to show the IRS that the casino is serious about BSA compliance.