Two weeks after Nevada approved new anti-money-laundering regulations for casinos, a member of the Gaming Control Board called for even more oversight.
George Assad, who has been outspoken on the subject of AML and lax casino oversight in recent years, outlined his plan to start Wednesday’s monthly meeting of the Board.
The Nevada Gaming Commission in April signed off on new regulations to hold industry executives accountable following a combined $32 million in fines over the past year-plus.
Under those changes, the Gaming Control Board will review and approve individuals whose primary responsibility is oversight of the casino’s AML program, along with employees within player development. Those with responsibility for the casino’s compliance will be required to be licensed and there will be restrictions on business entities funding patron’s wagering activities. The AML compliance officers are deemed to be gaming employees and require registration.
Companies are required to report to the Board when an employee is separated for violations related to the AML policies. There are now requirements for secondary representatives with AML training for independent agents and requirements of reporting dismissal for AML violations.
Assad praised the Commission for adopting the recommendations from the Board. He said they should prevent regulators needing to place people in the state’s Black Book, excluding them from casinos, as happened in recent months with illegal bookmakers allowed to gamble in Strip properties.
Assad singled out the part of the new regulations that allows the chief compliance officer to come before regulators for licensing.
“I have been passionate about this issue and argued strenuously for this regulation for the last three years, and I would like to thank (Chairman Mike Dreitzer) for getting this over the finish line,” Assad said. “This is an important tool to allow us to vet the chief compliance officer, which was not done previously, to hold that person accountable and responsible when compliance plans fail and a system that allows money laundering to take place on their casino floor.”
Assad called Nevada giving up up Regulation 6A to the federal government “a bad idea.” He questioning why the state in 2007 gave up oversight of financial transactions in Nevada casinos. The federal government receives millions of Suspicious Activity Reports every year from banks and other financial institutions along with casinos.
“Suspicious Activity Reports that come from Nevada casinos pretty much get lost in the shuffle,” Assad said. “We would have been much better off if we had maintained oversight over these reports and identified situations that occurred (with the illegal bookmakers added to the Black Book).”
Assad called for adding key sections of Regulation 6A into new regulations that allow the Board to receive information about suspicious financial transactions involving whales and large foreign financial transactions in casinos.
“We can better monitor compliance by casinos with regard to Title 31 (federal AML regulation) and BSA (the Banking Secrecy Act),” Assad said. “How about instituting a whistle-blower provision, perhaps a 1% reward that leads to an apprehension of a money-laundering criminal or scam? One percent of $10 million is $100,000. That would be quite an incentive for someone to come forward. How about stricter enforcement of source-of-fund scrutiny and actual verification and KYC (Know Your Customer) verification and not just checking a box?”
Assad said if records and more information are requested by the compliance team and if that is incomplete, unverified, or unsubstantiated, that patron should be temporarily banned until the compliance team receives accurate and verified documents that the source of funds are legitimate.
“Another idea is the standard of review by the Gaming Control Board that has been used in the past. Perhaps now we should go with what the executives and chief compliance officer should have known about that source of funds or about that patron,” Assad said. “Not what they actually knew. The days of ‘I didn’t know about (Matthew) Bowyer or I didn’t know about (Wayne) NIx and their sources of funds (as illegal bookmakers)’ should be over. You will be held to account of what should have been known using a reasonable person’s standard. If the key executives fail to exercise proper supervision over independent reps or casino hosts, they will be found unsuitable to hold a gaming license or registration and the company will be found operating in an unsuitable method of operation under Regulation 5011.”
Assad said Nevada’s crackdown on money laundering and placing illegal bookmakers into the Black Book send a strong message to the federal government that the state can regulate and police its own industry without a national gaming commission “looking over our shoulders. It also sends a message to would-be money launderers that they will be prosecuted and punished to the fullest extent of the law. Period. Finally, I hope it sends a message to our licensees that no one whale is worth jeopardizing their privileged gaming license.”
Assad encouraged casinos to use third parties to conduct testing of their compliance plan, use analytics, and data analytics along with AI to detect potential AML violations.
“Compliance departments should be looking out for things like structuring, minimal play off a large credit line or front-money deposit and then cashing out,” Assad said. “There’s chip washing and using Smurfs to gamble, abusing markers, cross-party laundering, large front money deposit, especially from foreign jurisdiction, chip sharing and two-party gambling. These are some of the ways that money launderers will utilize to effectuate their money laundering process. If we are to maintain our gold standard, we need to stay ahead of the curve when it comes to money laundering.”
