The Financial Crimes Enforcement Network announced a settlement Friday with $2.8 million in penalties against Hawaiian Gardens Casino, Inc. d/b/a The Gardens Casino, of Hawaiian Gardens, California.
The Gardens, a card club, admitted that it violated the Bank Secrecy Act’s compliance program and reporting requirements.
It agreed to enhance its compliance program and practices and to have periodic independent reviews to examine and test its BSA Anti-Money Laundering program.
According to FinCEN, The Gardens continued doing business with patrons the club had already identified as suspicious — even after some of them repeatedly refused to provide identification information.
One customer was allowed to continued gambling at The Gardens despite being the subject of 15 suspicious activity reports and refusing to provide identification three different times.
The same gambler also used agents to structure transactions. Structuring involves breaking cash transactions into multiple deposits or withdrawals of less than $10,000 each to avoid bank reporting requirements.
In 2011 and 2014, IRS examined The Gardens and identified “significant BSA violations.”
Many violations weren’t fixed.
From September 1, 2009 through the present, The Gardens failed to implement and maintain an effective AML program, failed to report large cash transactions, failed to file many suspicious activity reports (SARs), and failed to keep certain required records.
The Gardens didn’t identify and verify some customer information or determine when transactions or patterns should have triggered suspicious activity reports.
The casino could have used its surveillance and open source information. It also had customer information collected about players and scanned and monitored by employees every hour.
Because The Gardens didn’t use that information, 80 percent of its suspicious activity reports filed between January 1, 2013 and September 18, 2014 included at least one unknown subject.
“This allowed anonymous transactions and frustrated recordkeeping essential to identifying suspicious transactions and money laundering,” FinCEN said.
IRS examiners identified employees who helped customers with structuring. One employee was disciplined for assisting a customer’s structuring in 2009. But the IRS examiner found the same employee engaging in the same behavior in 2013, FinCEN said.
The IRS examines card clubs for compliance with the BSA under authority delegated by FinCEN.
Acting FinCEN Director Jamal El-Hindi said Friday: “The Gardens lacked the culture of compliance required to effectively manage its anti-money laundering responsibilities. It ignored the IRS findings — and the findings of its own consultant — thus allowing these violations to go on for years.”
Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016.