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Thursday
Apr072016

Nevada Casino ignored compliance chief, fined $1 million for ‘willful disregard’ of AML laws

The Treasury Department's Financial Crimes Enforcement Network (FinCEN) on Tuesday fined the Sparks Nugget $1 million after the casino admitted that it willfully violated the anti-money laundering (AML) provisions of the Bank Secrecy Act.

"Sparks Nugget egregiously and willfully violated AML program requirements, reporting obligations, and recordkeeping requirements," FinCEN said.

Casinos are required to have effective AML programs. They have to maintain records of certain transactions and file reports relating to transactions in currency and suspicious transactions.

Located in Sparks, Nevada, Sparks Nugget is an 84,000 square foot casino and a hotel with over 1,600 rooms in two towers. The Casino opened in 1955. 

In December 2013, after the AML violations occurred, Sparks Nugget, Inc. sold the casino property.

FinCEN Director Jennifer Shasky Calvery said Tuesday: “Despite the fact that it hosted convicted embezzlers and had been repeatedly alerted to suspicious transactions by its own [Bank Secrecy Act] compliance manager, Sparks saw no need to re-think its AML defenses.”

Sparks disregarded its compliance manager.

FinCEN said,

It chose not to file rightfully prepared Suspicious Activity Reports (SARs) and it instructed her to not interact with the Internal Revenue Service’s BSA auditors and prevented her from reviewing a copy of the completed exam report.

Sparks Nugget also committed hundreds of recordkeeping violations and failed to report several Currency Transaction Reports (CTRs) as well as SARs.

Sparks Nugget had a management committee to determine whether to file SARs. The committee "never held a single meeting, and some committee members were unaware that they were even on the committee," FinCEN said.

The casino lacked any mechanism to document or otherwise account for decisions not to file SARs. Its managers "maintained that no suspicious activity ever transpired in the millions of dollars of transactions that occurred at the casino."

Like other modern casinos, Sparks Nugget could have implemented risk-based, information-driven compliance. Instead it used software systems to gather large amounts of information about its customers.

"The casino used this information to improve profits, to provide more personalized customer service, and to minimize the casino’s business risk," FinCEN said.

FinCEN's Assessment of Civil Money Penalty In the Matter of Sparks Nugget, Inc. d/b/a John Ascuaga’s Nugget dated April 5, 2016 is here (pdf).

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