Category Archives: FinCEN Updates

FinCEN Updates

01.11.16
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FinCEN Enforcement Action: Oaks Card Club of Emeryville, CA

A card club is a gaming establishment where all the games are card-based. Oaks Card Club (aka Oaks Club) settled with FinCEN for $650,000 for violations of the program and reporting requirements of the Bank Secrecy Act.

Want a taste of why there was an enforcement action against Oaks Club? From FinCEN's news release:

Among its failures, Oaks relied on an inaccurate and misleading anti-money laundering (AML)
policy to train its staff. The AML policy failed to provide instructions, or provided wrong
instructions, concerning 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.

The press release also notes that Oaks Club filed no SARs in relation to illegal activity by its employees, including racketeering, that eventually led to a March 2011 raid by federal and state law enforcement.

FinCEN Director Calvery thanked the FBI and the US Attorney's Office for the Northern District of California for their help in the investigation.

Links:

FinCEN Press Release

Civil Monetary Penalty Assessment

 

12.29.15
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FinCEN issues impact and flexibility statements for proposed CDD changes

An interesting peek behind the curtain at the Financial Crimes Enforcement Network, or FinCEN. They're proposing beefing up the CDD rules to require beneficial owner identification for all new legal entities of every owner of 25% or more. Because the cost impact is significant (estimated to be $100 million per year to institutions), they not only had to issue a regulatory impact assessment, they also had to assess the need for some regulatory flexibility. On that second note, while many smaller institutions will be affected, the impact on each is not significant enough to warrant flexibility (i.e. Big number spread out over a lot of institutions ends up not being much cost per institution).

Now, the regulatory impact assessment is a lot meatier (33 pages). Mr. Watchlist will spend some of his vacation time looking at it a bit more but what he's seen so far is fascinating – there are estimates of how much reduction in “illicit activity” (most notably drug trafficking money laundering, it appears) is necessary to justify the rule change, and what the actual estimates are for the reduction.

It's nice to see that a cost-benefit analysis is part of the deal – sometimes, you wonder if, in the pursuit of greater compliance, the bottom line impact is even considered. It's nice to see that, at least in the AML world, that it is.

Links:

FinCEN Notice of Availability

FinCEN Regulatory Impact Assessment

FinCEN Initial Regulatory Flexibility Analysis

12.03.15
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If at first you don’t succeed: FinCEN tries again to sanction FBME Bank Ltd

FBME Bank Ltd: Re-opening of comment period and availability of supplemental information

On July 29, 2015, FinCEN issued a Final Rule imposing the fifth special measure against FBME Bank Ltd.
(FBME) with an effective date of August 28, 2015. On August 27, 2015, the United States District Court for
the District of Columbia granted FBME’s motion for a preliminary injunction and enjoined the Final Rule
from taking effect. On November 6, 2015, the Court granted the Government’s motion for voluntary
remand to allow for further rulemaking proceedings. On November 27, 2015, FinCEN published in the
Federal Register a Notice to re-open the Final Rule for 60 days to solicit additional comment in connection
with the rulemaking, particularly with respect to the unclassified, non-protected documents that support
the rulemaking and whether any alternatives to the prohibition of the opening or maintaining of
correspondent accounts with FBME would effectively mitigate the risk to domestic financial institutions.
The Notice can be found at http://www.gpo.gov/fdsys/pkg/FR-2015-11-27/pdf/2015-30119.pdf. The
unclassified, non-protected documents that support the rulemaking are available at http://www.regulations.gov
[Docket ID: FINCEN_FRDOC_0001].

Link:

FinCEN Notice

 

11.09.15
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FinCEN publishes 2nd edition of SAR Stats

The notice from FinCEN notes that one of the typologies noted is rewards-based crowdfunding. Keeping up with the times, I see.

This is a really nice report – it includes a Trending Now section, a section highlighting a single sector, and another highlighting trends from SAR narratives, among others.

Links:

SAR Stats Issue 2

Interactive SAR Stats

 

09.14.15
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Caesar’s Palace rolls the dice – and loses!

The Las Vegas casino settled with the Financial Crimes Enforcement Network (FinCEN) for a mere $8 million dollars for its AML program failures. FinCEN called the failures “willfull and repeated” and focused in on the handling of its high roller program. Caesar’s also agreed to “conduct periodic external audits and independent testing
of its anti-money laundering (AML) compliance program, report to FinCEN on mandated
improvements, adopt a rigorous training regime, and engage in a “look-back” for suspicious
transactions.”

The enforcement action goes into a touch more detail. Most notably:

Caesars permitted the guests of private
gaming salon patrons to play using the primary patron’s credit or front money instead of their own
(i.e., “team play”). This potentially enabled guests to conceal their identity and transactions, thereby
frustrating recordkeeping and reporting requirements. 31 C.F.R. §§ 1021.410 and 1021.311. By
failing to identify these guests, Caesars allowed some of the guests to gamble significant sums
anonymously. Caesars also would not have been able to identify these anonymous guests as a
subject in a SAR had the casino filed SARs to report their team play as suspicious.

Links:

FinCEN Press Release

FinCEN Enforcement Action

 

09.07.15
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August 7, 2015: FinCEN renews California bulk cash GTO and extends it to Texas border areas

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) today renewed a Geographic Targeting Order (GTO) currently in place for armored cars and other common carriers of currency at two border crossings in Southern California and issued a new, similar, GTO applicable to carriers crossing the border at eight major ports of entry in Texas. The GTOs’ reporting and recordkeeping requirements are designed to enhance the transparency of cross-border money movements and prevent the attempted exploitation of reporting exemptions by some carriers suspected of moving dirty cash for Mexican drug trafficking organizations.

Link:

FinCEN press release