Regulators pushing banks to rid casinos of money-laundering

Casinos are under pressure to stop money laundering.

Large global banks are facing pressure from the American government to clamp down on money-laundering in casinos, reports the news agency Reuters.

The clampdown is reported to have led to much scrutiny, and required a great deal of collaboration between the gambling industry, and the banking industry.

Banks have been vetting clients of casinos, and are checking to make sure casinos do not accept anonymous wire transfers. They are also offering databases and other information to help the gaming industry identify risky transactions.

Some banks are upset at the level of work required and the potential of non-compliance fines. Standard Chartered Plc said earlier this month, on August 6, that a computer in its anti-money-laundering surveillance system made an error, which a source said could trigger fines between $100 million and $340 million payable to New York State’s financial regulator. Furthermore, during an interview with Reuters on August 7, Standard Chartered Chief Executive of Asia, Jaspal Bindra, said the penalties are unfair.

She said: “We are supposed to police that our counterparties and clients are not money laundering, and if when we are policing we have a lapse, we don’t get treated like a policeman who’s had a lapse, we are treated like a criminal.”

Historically, casinos have been a popular method of money laundering. This is because it was once easy to transfer large sums of money through casino accounts, and swap ill-gotten gains for chips, and then trade them for clean cash. However, to clamp-down on this, a few years ago regulators asked casinos to report all suspiciously large transactions. This hasn’t, however, stopped the flow of illicit funds, since criminals have developed sophisticated methods of getting around the rules, and, anti-money laundering consultants argue, this is also because casinos have not always complied with the rules.

Recently, regulators have become more aggressive about enforcing the rules – both on casinos and banks. In 2012, for example, financial institutions agreed to pay $3.5 billion in anti-money laundering infractions, which was up from the $26.6 million in 2011, according to figures from the Association of Certified Anti-Money Laundering Specialists. Banks, in response, have to take further steps to ensure that their casinos customers’ accounts are legitimate.

The casino industry is just one of many that enforcement officials have started targeting through banks to enforce laws.

For the Department of Justice in America, stopping money laundering has become a very high priority, following the global crash of 2008 that resulted from lax controls. However, the increased scrutiny on banks regarding casino money-laundering is a recent phenomenon and it has intensified significantly in the past year.