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Feds: Casinos Must Track Pot Business Owners, Workers At Game Tables


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Colorado's 40 casinos — and hundreds of others, including in the gaming mecca in Las Vegas — are bound by the same money-reporting rules that have made banks reluctant to let legal marijuana businesses open bank accounts, federal authorities now say.

That means casinos can keep anyone associated with legal weed enterprises — from dispensary to grow operations — away from gaming tables anywhere in the country.

And if they do allow them to play, casinos must file the same suspicious activity reports banks must file whenever they handle money derived from pot profits, according to the Financial Crimes Enforcement Network, a division of the U.S. Department of the Treasury.

"FinCEN's guidance applies to all financial institutions covered under FinCEN regulations, including casinos," FinCEN's public affairs director Stephen Hudak told The Denver Post.

Because the government says casinos are financial institutions, like banks, they must have stringent anti-money-laundering programs in place.

Filing suspicious activity reports, or SARs, to crack down on money laundering by criminal and terrorist organizations is not new for casinos.

What is new is that it now extends to the legal marijuana trade.

While FinCEN in February announced how banks could work with legal marijuana businesses, the government only now realized it extends to casinos.

That's in any casino in the country — whether in Colorado, Atlantic City or Las Vegas — on land, on water or on sovereign American-Indian soil. So a casino on the Las Vegas strip would, by law, have to pay attention to the owner of a marijuana dispensary in Colorado who heads there to gamble.

Currently, 22 states have legalized the sale of medical marijuana and two — Colorado and Washington — have legalized recreational sales. Colorado and 41 other states have some form of legal casino gambling.

The news — revealed June 12 at a Las Vegas conference directed at curtailing money laundering — has stopped state regulators and the casino industry in its tracks.

"The (Colorado) Division of Gaming was unaware of the FinCEN guidance," spokeswoman Cameron Lewis told The Post. "Division management will be taking this matter under discussion."

Similarly, the Colorado Gaming Association, the trade group that represents the state's casinos, was unaware of the requirement.

"To my knowledge, we have not been contacted by FinCEN regarding any issues dealing with ... marijuana suppliers," executive director Lois Rice said.

Like banks, casinos must "know their customer" and have some knowledge of their source of funds. The casino industry keeps close track of gamblers through a variety of methods including high-roller clubs, frequent-player programs and other in-house incentives.

"Casinos most comply with the government's guidance on filing suspicious-activity reports" said Jim Dowling, an anti-money-laundering consultant.

"Their alternative is to not conduct a financial transaction with these individuals who were involved directly, or indirectly in the MJ business," said Dowling, a former IRS agent who was also an adviser on money-laundering issues to the White House.

Because marijuana is illegal under federal law, FinCEN's requirements for doing business with the marijuana industry modified how financial institutions are to file SARs.

The reports must now reflect that clients are in states where marijuana sales are allowed.

Although the pot industry saw it as a first step in obtaining banking services — and more recent efforts have included the theoretical creation of a marijuana financial cooperative — Colorado banks have mostly shied from opening the door too widely.

The marijuana-specific reports would either identify the cannabis-related business or employee as legally operating under appropriate guidelines, identify them as one conducting suspicious activity, or as one where the casino has ended its banking relationship "in order to maintain an effective anti-money-laundering" compliance program.

The seven-page guidance also notes a number of "red-flag" scenarios that would require a bank or casino to file a SAR, including for a customer "depositing cash that smells like marijuana" who might be trying to conceal involvement in marijuana-related business activity.

"There are a number of ways money laundering can occur in a casino," Dowling said, "and keeping track of this is very labor-intensive."

FinCEN Director Jennifer Shasky Calvery told attendees at the Las Vegas conference that it's no secret casinos are targets of organized crime.

"Illicit actors are also looking to game the system so that they can move or hide funds among the many cash and non-cash transactions you conduct daily," she said. "Think about what happens each time a customer enters your casino. Often, the first thing a customer does is conduct a financial transaction — they buy chips. And the last action a customer takes is usually also a financial transaction — they cash out those chips."

Casinos, like banks, must know who is bringing them money, she said, and meeting that obligation relies on the casino's ability to understand with whom it is doing business.

"It's one thing when it's organized crime or terrorist money laundering, when the individuals might be unknown," Dowling said. "It's quite another matter when it's a licensed business and the individuals associated with it are indeed known."

With a dispensary's difficulty in obtaining a banking relationship, casinos could become an easy substitute.

For instance, "chip walking" — when chips are not redeemed — is a well-known problem at casinos. A marijuana business without a bank account could choose to pay its employees with casino chips, which are redeemed for cash, a transactions that is, by definition, now laundered.

Chips purchased with marijuana-derived funds also can be redeemed for cash or a casino's check, which could then be deposited into a personal bank account.

Though Colorado has a $100 limit on the size of a bet, there is no limit on how many chips a customer can purchase. FinCEN's rules require casinos to file SARs when it "knows, suspects, or has reason to suspect" a transaction is suspicious, but only when the amount of money involved — typically buy-ins or cash-outs — is at least $5,000, at once or in a single day.


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5 hours ago, Rearld said:

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