AML is craps, blackjack, poker and roulette too. The odds are that when you take a closer look at most money laundering cases — gambling will have been an element, issue or excuse. Although millions visit casino resorts yearly, including those attending ACAMS conferences, most people have little more than a cursory knowledge of what is happening on the casino floor, or that casinos themselves fall under BSA/AML regulations. This naivety to the intricacies of casino gambling may not be as detrimental to your AML prowess as you might think.
Although currency still remains a criminal favorite, between technology, added awareness and scrutiny on BSA and AML compliance, bulk currency continues to go out of fashion in the legitimate world. Those thick wads of cash that used to bring smiles and service now draw suspicions almost everywhere — except casinos. Shows, meals and luxury rooms are just some of the comps and perks offered to you depending on how much cash you are willing to hand over to the dealers.
Never underestimate the emotional energy connected to criminal proceeds and the need of an outlet for it. Combine these emotionally charged ill-gotten gains with the electrically charged atmosphere inside a casino and you have a money launderer's magnet. It is easy to see that combining the "work" of laundering money with the "play" of gambling has made this a top attraction in the money laundering world.
Often it may start as just an emotional outlet. Take for example the actual story of the finance clerk who embezzled around $20,000.00 from her employer. Gambling with a small part of her embezzled proceeds she suddenly hits a slot machine jackpot netting her $80,000.00. Unfortunately for her the crime was simultaneously being discovered and she was arrested not long after returning home. She also still had most of the $20,000.00 she had stolen. An interesting question outside the purview of this article is what should happen to her jackpot?
The wins, losses and shuffling of money around the casino floor can provide even an amateur money launderer enough confusion and cover to distract or mislead an AML investigation. Rest assured had our embezzler's crime not been discovered she certainly would have had a viable cover story or explanation for her sudden prosperity. So, what are the essentials that AML professionals need to know when it comes to casino gambling?
Any sudden start of or noticeable increase in casino activities, especially with other AML indicators, is worthy of enhanced scrutiny. There are far more nefarious reasons for changing to a casino centric life than legitimate ones. Although you need to consider any potential exculpatory indicators, you may find a hard time conceiving many when casino gambling is becoming prominent. A decent into degenerate gambling, might be one, but that also might call for some investigative scrutiny.
No dynamic personality, lucky charm, potion, nor star alignment can change the fact that in the long run casino gambling is a losing proposition. If anyone tells you they "always win" they are lying to you and probably themselves. If your investigation tends to reflect that someone seems to always be winning, they are very likely laundering money. The more sincere, passion or emotion someone puts into trying to convince you otherwise, the more suspicious you need to be.
The attraction to money launderers is based on the fact that in the short term people do win money at casinos
The attraction to money launderers is based on the fact that in the short term people do win money at casinos. Money launderers and degenerate gamblers will exploit, exaggerate and over emphasize these wins to mask the true nature of their activity. Artificially creating the perception of such wins like our embezzler's is the goal of a money launderer at the casino. Although this can be accomplished at nearly every game in the casino some games are definitely more conducive than others.
Our embezzler started out at the casino for the "fun and games" aspect more than for a deliberate money laundering scheme. Slot machine jackpots (such as she won) offer the chance of a highly visible and easily verifiable payoff but a lot of money can be lost trying to get that to happen. Table games are a more widely used choice for money laundering schemes. Generally, they offer a slowed down win-lose pace and can reduce the expense of the money launderer's scheme to the much lower casino advantage in these games. That advantage can be down to just a couple percent and with the added comps and perks casinos offer this can be both a fun and economical way to launder money.
It is not essential to learn the intricacies of the table games for AML purposes. All you need to understand is that the money launderer's goal is not to gamble but to give the appearance of gambling. The most commonly reported scheme by casinos is patrons who purchase substantial amounts of gaming chips at a table and cashing them in after little or no playing. Although there are a plethora of other schemes that actually include gaming, consistently leaving a casino even or seemingly ahead should be an AML focus. That truly is against the odds.
Somewhat of a paradox, knowing the intricacies of the game play can even be detrimental to the AML investigation. Getting into debates about win/loss patterns, game strategies and fluctuations are part of the distractions these money laundering schemes have planned for. There are enough truths in the actual gaming, like that of our embezzling winner, to deflect away from the main issue of what prompted this newly found casino centricity. By design there will be ample evidence of casino gaming in this type of money laundering scheme. Investigators should take notice when proof of winnings is available long before any other financial document. The wins are the first line of defense.
In another actual case, a contractor, previously convicted for fraud, was all too willing to prove that a lucky streak at blackjack was the source of the cash in a series of structured cash deposits that agents were investigating. He even assisted the agents in contacting his casino host who eagerly confirmed this lucky weekend during which over $100,000 was won. This might have deflected the agents' inquiry until one agent stopped to notice this winning weekend was actually a week after the questionable deposits had all been made.
One underestimated issue casinos present for successful AML investigations is often in the logistical, venue and jurisdictional considerations. Travel distances of a couple hours or more between home and the casino, which is very common, can seriously impact whether a committed investigation is undertaken. Even if a casino SAR might reflect a strong lead for an investigation, those with jurisdiction of the casino's location may rightly consider that as an issue for the subject's residential location. The investigators in the residential jurisdiction of the subject in turn often find it hard to embrace or undertake an investigation where the initiating tip or allegation happened elsewhere.
The Internet is loaded with videos and articles that can give you useful information on casino gambling—in general or specific game playing. You can even learn and practice many of the games with free downloads and apps. The casinos themselves have literature and even free lessons on learning some of the games. In the end you do not need to "know when to hold them and know when to fold them" to successfully explore, examine or investigate the gambling components of AML. If the nuances of "splitting eights," "hard ways," and "big blinds" are confusing you, you are playing the money launderer's game not yours.
The gambling element is like many other elements found in an AML case. You need to simply establish what normal looks like and define where your case leaves normal. Even though it may be completely normal to occasionally visit a casino and occasionally win, when things morph beyond that an investigation is warranted. You can bet on that.
Steve Gurdak, CAMS, supervisor, Washington Baltimore High Intensity Drug Trafficking Area (HIDTA) Northern Virginia Financial Initiative (NVFI) Annandale, Virginia, USA, email@example.com