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Suspicious activity reports filed by NY casinos surpass last year’s total

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Suspicious activity reports filed by NY casinos surpass last year’s total

About 370 suspicious activity reports have been filed with federal regulators by New York’s state-licensed and tribal-authorized casinos this year through September, eclipsing last year’s final tally of 295, according to Treasury Department statistics reviewed by The Alt.

Casinos must file SARs with the Financial Crimes Enforcement Network, or FinCEN, a bureau of the Treasury Department, when they suspect or know a transaction worth $5,000 or more suggests potential money laundering or other criminal activity. FinCEN maintains a public statistics tool that shows data collected from these forms, which are also filed by banks, insurance companies, and other financial institutions.

SARs, under the Bank Secrecy Act and related regulations, are “intended to remain confidential,” FinCEN spokesperson Steve Hudak told The Alt. “They can’t be introduced in court as evidence,” but can serve as tips to law enforcement, who might then use other means, like subpoenas or wiretaps, to pursue an investigation if warranted.

Filers can select multiple suspicious activities on one form. Common activities indicated by New York casinos include “Minimal Gaming with Large Transactions,” “Refused or Avoided Request for Documentation,” and various forms of “structuring,” a term for breaking up transactions to evade reporting requirements. 

The increased number of filings by casinos in the state may reflect the recent expansion of gaming. Three new gaming resorts—Rivers Casino in Schenectady, del Lago in Waterloo, and Tioga Downs in Nichols—opened near the start of this year. There are also nine combination racetrack-casinos (“racinos”) and six Indian gaming facilities “that operate within the state’s borders pursuant to compacts between the respective Nation” and the state, according to the Gaming Commission.

State Gaming Commission spokesperson Lee Park declined to comment on the rise in SAR filings, other than noting “that three new casinos opened during the past year, and the reporting illustrates the diligence of the individual operations.”

The racinos and new upstate facilities have generated nearly $1.8 billion in combined net win and gross gaming revenues this year. Nearly 30 million people visited the state’s racinos in 2014, according to the New York Gaming Association, a trade group.

The FinCEN statistics tool does not display the names of casinos that have filed particular reports. It does, however, allow users to sort casinos by type (state-licensed or tribal-authorized) and county.

solc1Representatives of many New York casinos either declined to comment or did not respond to emails. One spokesperson emphasized that SAR filings are simply a part of a casino’s relationship with federal regulators, and that the number of filings ought to be viewed in the context of their millions of visitors. (Financial institutions, including casinos, are barred from disclosing whether or not they have filed particular SARs.)

Casinos and card clubs in U.S. states and territories have filed nearly 46,000 SARs this year, FinCEN statistics show. Nevada (10,043), Louisiana (6,355), and California (4,072) are the top states. New York’s total places it 22nd, above Arizona and just below Colorado.

In a press release last year, FinCEN acting director Jamal El-Hindi said that U.S. “casinos appear to be steadily improving their anti-money laundering efforts,” noting that annual filings had increased from fewer than 14,000 in 2010 to nearly 50,000 half a decade later. “Those numbers tell us that casinos are paying more attention to their [anti-money laundering and countering the financing of terrorism] responsibilities,” El-Hindi said.

When more casinos meet their SAR filing duties, federal law enforcement has “a greater ability to trace and detect illegal use of financial institutions (including casinos) by criminal enterprises,” Matthew Orso, an attorney at McGuireWoods LLP whose expertise includes anti-money laundering compliance, told The Alt in an email.

A former FinCEN director once characterized the relationship between regulated institutions and the bureau as a “public-private partnership” that “serves as the foundation for the protection of the U.S. financial system.”

New York state regulations also require that casinos sustain anti-money laundering programs, which involve the establishment of internal controls and the appointment of a compliance officer. Forms related to these efforts must be filed annually with the state Gaming Commission. (Spokesperson Lee Park declined to discuss the agency’s anti-money laundering oversight procedures, citing a need “to preserve the integrity of our regulatory role.”)

The state Department of Financial Services has an information-sharing agreement with FinCEN, but the agency does not regulate casinos or gaming, a spokesperson told The Alt.

The Times Union reported in September that the three casinos licensed under the Upstate NY Gaming Economic Development Act—Rivers, del Lago, and Tioga Downs (a fourth one will open next year)—are “hundreds of millions of dollars behind what they projected they would make in their first year of operation.”

Last month, according to Rochester’s Democrat and Chronicle, a state legislator asked comptroller Thomas DiNapoli’s office to review the facilities’ financial projections.

View suspicious activity report filings, including those of New York casinos, at https://www.fincen.gov/reports/sar-stats.

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