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Tuesday
Dec222015

FinCEN fines ‘card club’ $650,000 for BSA offenses

The Treasury Department's Financial Crimes Enforcement Network announced its first enforcement action against a “card club” gaming business.  

Oaks Card Club of Emeryville, California admitted last week that it violated the program and reporting requirements of the Bank Secrecy Act (BSA). 

FinCEN fined Oaks $650,000 for willful violations of the BSA.

A card club is a type of gambling business where games are generally limited to those actually involving playing cards. In card clubs, players play against each other and not against the “house.”  Like casinos, card clubs are defined as financial institutions under the BSA and are subject to FinCEN’s rules.

Among its failures, Oaks relied on an inaccurate and misleading anti-money laundering (AML) policy to train its staff, FinCEN said. The AML policy failed to provide instructions, or provided wrong instructions, about the card club’s BSA obligations and filing of BSA reports. 

For example, it encouraged employees to provide notice to patrons if they were about to conduct a cash transaction that would put them over the $10,000 threshold for the filing of a Currency Transaction Report, thereby possibly encouraging structured transactions. 

The policy also lacked instructions on when an employee should file a Suspicious Activity Report (SAR). The Oaks filed no SARs in 2009 and 2010.

Several Oaks employees and patrons were arrested after a March 2011 raid by state and federal law enforcement. Despite that, Oaks failed to file any SARs related to the criminal activity on its premises, including making illegal loans and racketeering, FinCEN said.

“Oaks Card Club has been in business since 1896, and had been subject to the Bank Secrecy Act for quite some time,” FinCEN director Jennifer Shasky Calvery said.

“That should have allowed enough time to become very familiar with what’s right and what’s wrong," she said.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.